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A Theory of Monopolistic Competition with Horizontally Heterogeneous Consumers

By Sergey Kokovin, Alina Ozhegova, Shamil Sharapudinov, Alexander Tarasov, and Philip Ushchev

American Economic Journal: Microeconomics, May 2024

Our novel approach to modeling monopolistic competition with heterogeneous firms and consumers involves spatial product differentiation, in either a geographical space or a space of characteristics. In addition to price, each firm chooses location in spac...