How brand loyalty affects product differentiation
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This paper examines the effects of brand loyalty on the amount of product differentiation. It presents three different methods of modeling brand loyalty in a spatial framework. Brand loyalty might be caused by switching costs, either constant or a function of how similar the product variety is to the consumer's most-preferred variety. These methods of modeling yield some (but not maximum) differentiation among the products in a duopoly. If the assumption of constant preferences is relaxed, the standard minimum differentiation result holds, and brand loyalty has no impact on varieties.
Harter, John R.F., "How brand loyalty affects product differentiation" (2004). EKU Faculty and Staff Scholarship. 593.
Journal of Applied Economics and Policy