cement, perfumes, fast food, compact cars. by advertising intensity? Why? - 14.6. ProduCt POSITIONING AND PRICE COMPETITION. Consider a duopoly where horizontal product differentiation is important. Firms first simultaneously choose their product locations, then simultaneously set prices in an infinite series of periods. Suppose that firms collude in prices in the second stage and anticipate they will do so at the product-positioning stage. In this context, what do you expect the degree of product differentiation to be? 22 CHALLENGing EXERCISES - 14.7. Price COMpetition WItH SEARCH costs. Twenty-five different stores sell the same product in a given area to a population of 2,000 consumers. Consumers are equally likely to first visit any of the 25 stores. Half of the consumers have no search costs and.