In this chapter we model localized competition between firms when consumers exhibit brand lock-in or loyalty. We derive the symmetric equilibrium mixed strategy price distribution under two alternative models, and compare them to symmetric equilibrium strategies under non-localized competition....

I analyze the implication of consumers' limited attention to quality differences on market outcomes and welfare. I model this limited attention to quality differences with a perception threshold: Consumers only perceive quality differences between goods that exceed the consumers' perception...