A serious, often the principal, problem facing every firm in competition is how far to imitate, or to diverge from, decisions of competitors. Whether we prefer to think in terms of spatial, quality, price, or of any variety of competition, the firm's ability to choose between higher or lower degrees of imitation of its rivals is a prerequisite to the maximization of its general preference function. Traditional analysis has pointed to discontinuous and abrupt imitation, or clustering, as the principal characteristics of oligopoly. The purpose of this paper is to show that such a view is not necessarily correct. It will be seen that an independent marketing policy, often encountered in practice, can be justified theoretically as long as threshold-sensitive market behaviouris taken into account. We shall choose an example in spatial duopoly, based on a recently developed theoretical mechanism, where threshold-sensitive consumer behaviour-as opposed to the hyper-sensitive human conduct which is traditionally postulated was introduced by assuming a minimum sensibile range of indifference for choice between comparable alternatives.2 The generally-shared view in the behavioural sciences that human conduct is best explained as threshold-sensitive response to environmental stimulation forms the basis of our theory. The device of the threshold is emphasized here because it is believed that it enables any desired amount of composite behavioural detail to be introduced consistently into the analysis.3 The traditional economic assumption of
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Devletoglou et al. (1967) studied this question.