While this is a book on product differentiation, it is a book about the core of economic theory that relates to this topic. The last decade has seen a rapid growth in the literature in this area. A particular problem with the literature is that it is quite widely spread across academic journals and hence someone who wanted to find out the state of the art would need to search widely and at length. What we have sought to do here is to bring this all together in a convenient form both for our fellow academics and for students at both the undergraduate and graduate levels.

In deciding what we should include in the book we have taken the view that the most significant theoretical issues in the literature have been the distinction between horizontal and vertical differentiation and the nature of their market equilibria, the advances in the analysis of locational equilibria and the limit results. We have therefore tried to provide an in-depth treatment of these topics and of some of the more fundamental applications of the theory.

In working on the manuscript we have profited from the comments of Roger Backhouse, Paul Geroski, Norman Ireland, Damien Neven, John Sutton, Jacques Thisse and David Ulph. We should also like to express our thanks to Francis Brooke and Patrick McCartan for their interest in initiating and seeing this project to fruition as well as to Anne Rix, our copy-editor.