COMPETITIVE RESPONSE TO RADICAL PRODUCT INNOVATIONS The competitive case serves as a baseline, but it is not a realistic description of choice in the presence of peer group externalities. I next consider a market with ten equally-sized districts, a degree of Tiebout choice that, as is discussed below in Section , corresponds roughly to the 80th percentile . metropolitan area. Assume that J = 10 , n = N 10 , and 10 j μ j = , j = 1,K,10 . Panel C of Figure displays the unique, perfectly sorted equilibrium when δ = 0 . Families in the j th decile of the income.
