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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Related Book For
Industrial Organization Markets and Strategies
ISBN: 978-1107069978
2nd edition
Authors: Paul Belleflamme, Martin Peitz
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