The notion of `community-wide character displacement' hypothesizes tha
t locally co-existing sets of competing species should be less similar
than expected when compared to random expectations from a broader reg
ional species pool. Here I use a mechanistic approach to the niche con
cept to show how this expectation is dependent on the types of traits
involved. I investigate how two different niche components, those that
relate to species' requirements (or responses to environmental factor
s) versus those that relate to species' impacts (or effects on environ
mental factors), a?ect predictions about the similarity of locally co-
existing species. In contrast with more conventional approaches that f
ocus on species impacts, I focus on species responses to conclude that
locally co-existing species should be more similar in such traits tha
n expected on the basis of random assortment from a larger equilibrium
regional biota. In addition, I explore the evolutionary implications
of exceptions that might favour the co-existence of species with dissi
milar traits (especially those that determine species' impacts on the
environment) and conclude that these implications di?er when species c
ompete for shared resources, interact via shared predators, or interac
t via both mechanisms. The analysis developed in this paper shows that
the co-existence of species that are more similar than expected by ch
ance is not incompatible with the notion of strongly interacting speci
es in saturated local communities near equilibrium.