Quality as vertical Product Differentiation We modify the utility function in Hotelling model so that instead of having consumers gain a higher utility from the nearby brand all consumers would have their ideal brand located at point l on the [o 1] interval This modification would allow us to model product differentiation where firms still locate on the [o, 1] interval(and not outside this interval)Quality as Vertical Product Differentiation • We modify the utility function in Hotelling model so that instead of having consumers gain a higher utility from the nearby brand, all consumers would have their ideal brand located at point 1 on the [0,1] interval. • This modification would allow us to model product differentiation where firms still locate on the [0,1] interval (and not outside this interval)