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Theoretical models of spatial product differentiation indicate that firms face two opposing incentives: (1) minimize differentiation in order to "steal" customers from competitors, and (2) maximize differentiation in order to reduce price competition. Using data on U.S. airline departure times from 1975, when fares were regulated, and 1986, when fares were not regulated, we empirically estimate the effect of competition on differentiation. We find a negative relationship in both periods. Indoi:10.1016/s0167-7187(97)00058-1 fatcat:xiv6q63dlnfhhjyzippzem7lbe