Question
(6 points) Suppose 2 competitors (A and B) each own a Del's Lemonade cart and must simultaneously decide where to set up their carts on
(6 points) Suppose 2 competitors (A and B) each own a Del's Lemonade cart and must simultaneously decide where to set up their carts on the sidewalk along a beach in order to maximize their profit. Each owner can set up a cart at either end of the sidewalk or anywhere in between. (Assume the sidewalk is a simple line along the the beach). Their customers are equally distributed across the beach. If A sets up his cart at one end of the beach, what is the best response strategy for B (where should B set up his cart in response)? Given B's best response from your previous answer, how should A react (where would A move their cart in response)? Given these answers, where would the 2 competitors end up placing their carts? Explain.
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