A comprehensive variational study of the two-impurity Anderson model is presented. First a lowest-order basis is introduced, which does not contain electronic excitations above the Fermi level: in this basis, the indirect f-f interaction of the form -J${\mathbf{S}}_{1}$\ensuremath{\cdot}${\mathbf{S}}_{2}$ is not generated but is added by hand. The effect of electron-hole (EH) excitations is also studied. A suitable discretization of the continuous band spectrum allows us to obtain all eigenvalues and eigenvectors and to calculate finite-temperature magnetic properties. For a distance R>${\mathit{R}}_{\mathit{c}}$, where ${\mathit{R}}_{\mathit{c}}$\ensuremath{\sim}2.5(${\mathit{k}}_{\mathit{F}}$${)}^{\mathrm{\ensuremath{-}}1}$ (${\mathit{k}}_{\mathit{F}}$ is the Fermi wave vector), the interference between screening clouds around the two impurities is weak and the physics depends smoothly on the ratio between the coupling J and the Kondo temperature ${\mathit{T}}_{\mathit{K}}$. In this regime, the effect of EH excitations is to renormalize the f-level energy and to add the magnetic interaction. At finite temperature, the results of scaling theory and of quantum Monte Carlo simulations are recovered, with growth of magnetic correlations down to temperatures T\ensuremath{\sim}${\mathit{T}}_{\mathit{K}}$ and a two-stage Kondo effect for J\ensuremath{\gg}${\mathit{T}}_{\mathit{K}}$. For R\ensuremath{\rightarrow}0, the impurity spins lock in a triplet and the binding energy is exponentially increased, indicating that a collective Kondo effect takes place. At zero distance, only a half of the total impurity moment is compensated at low temperature. The magnetic interaction now competes with the enhanced binding energy. It is argued that the short-distance beahvior of the two-impurity model is not representative of the properties of the periodic Anderson model close to half-filling.
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