AbstractIn territorial species, nonterritorial floaters may be critical to population dynamics. One theoretical framework, based on the assumption that floating is a strategic decision to forego reproduction, predicts that selection maintains an abundant floater population even if low‐quality territories are available. However, existing models make two critical assumptions: all individuals have equal competitive ability, and every individual in a population has access to every available territory. We assess the consequences of relaxing these assumptions in a model of asymmetric competition with a trade‐off between investment in competitiveness and reproductive success. Our results demonstrate that selection for greater competitiveness eliminates floater production unless the outcome of territorial contests has a strong stochastic component. Next, we suppose individuals can compete for territories only within a fixed neighborhood. If this constraint is sufficiently strong, our model predicts that a population will produce floaters. Finally, we show that our model makes novel predictions regarding the maintenance of trait variation and the relationship between this variation and the distribution of competitors among unequal territories.