Reconsider the simple Hotelling model in which consumers are uniformly distributed on the unit interval and firms
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Reconsider the simple Hotelling model in which consumers are uniformly distributed on the unit interval and firms are located at the extremes of this interval. Now take consumer’s participation constraint explicitly into account. Derive the equilibrium depending on the parameter τ. [Be careful to distinguish between different regimes with respect to competition between firms!]
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In the Hotelling model with a participation constraint consumers will only participate in the market ...View the full answer
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Related Book For
Industrial Organization Markets and Strategies
ISBN: 978-1107069978
2nd edition
Authors: Paul Belleflamme, Martin Peitz
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