We use high resolution simulations to study the formation and distribution of galaxies within a cluster which forms hierarchically. We follow both dark matter and baryonic gas which is subject to thermal pressure, shocks and radiative cooling. Galaxy formation is identified with the dissipative collapse of the gas into cold, compact knots. We examine two extreme representations of galaxies during subsequent cluster evolution --- one purely gaseous and the other purely stellar. The results are quite sensitive to this choice. Gas-galaxies merge efficiently with a dominant central object while star-galaxies merge less frequently. Thus, simulations in which galaxies remain gaseous appear to suffer an ``overmerging problem, but this problem is much less severe if the gas is allowed to turn into stars. We compare the kinematics of the galaxy population in these two representations to that of dark halos and of the underlying dark matter distribution. Galaxies in the stellar representation are positively biased (ie over-represented in the cluster) both by number and by mass fraction. Both representations predict the galaxies to be more centrally concentrated than the dark matter, whereas the dark halo population is more extended. A modest velocity bias also exists in both representations, with the largest effect, $sigma_{gal}/sigma_{DM} simeq 0.7$, found for the more massive star-galaxies. Phase diagrams show that the galaxy population has a substantial net inflow in the gas representation, while in the stellar case it is roughly in hydrostatic equilibrium. Virial mass estimators can underestimate the true cluster mass by up to a factor of 5. The discrepancy is largest if only the most massive galaxies are used, reflecting significant mass segregation.
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