Abstract
The paper studies the competition between identical firms each supplying a range of products of different quality. The results obtained capture many features which seem to characterise these industries: firms compete “head-to-head”, by matching exactly each other's product line; they may leave “holes” in the product line (not due to the existence of fixed costs). Entry of new firms determines a reduction in the number of varieties available. The paper ends with an interpretation of the model in terms of international trade.
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