Suppose that there are two types of firms. All firms have U-shaped average cost curves, where $n$

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Suppose that there are two types of firms. All firms have U-shaped average cost curves, where $n$ firms have average costs of $AC(q)$ and $m$ firms have average cost curves of $AC(q) + k$. There are two types of consumers: The natives have zero search costs, and the tourists have very high search costs. Describe the resulting equilibrium.

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Modern Industrial Organization

ISBN: 9780321011459

3rd Edition

Authors: Dennis W. Carlton, Jeffrey M. Perloff

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