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Assume that the Nevada Strip is one mile long with 10,000 over-the-top steak consumers distributed equally across the Strip. These consumers, who include the most
Assume that the Nevada Strip is one mile long with 10,000 over-the-top steak consumers distributed equally across the Strip. These consumers, who include the most notorious high-rollers in all of Nevada, will all go to the closest over-the-top steak purveyor and pay $1, 100 per steak at a cost to either purveyor of $100 each. Having not considered the possibility of a competitor, the incumbent Salamanca opened his Nevada outpost of Naans smack dab in the middle of the Strip (at .5). For now, assume that Salamanca cannot move his Naans outpost to another location on the Strip and cannot open an additional outpost. a. If the fixed cost of entry is $4,000,000 and Diablo can open at most one establishment, where would he locate? b. If the fixed cost of entry is $4,000,000 and Diablo can open as many Diablo Steak Palace outposts as he would like, how many would he open and where would he locate them on the Strip? c. If Salamanca had foreseen the potential entry of his new rival Diablo, how many outposts of Naans should he have opened on the Strip, and where should he have located them
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