Consider a market in which firms 1, ..., N are equidistantly distributed on a circle with circumference 1. Firms have constant marginal costs of production c, which are the same for all firms. Consumers are uniformly distributed on the circle (and have mass 1). A consumer x incurs a transportation |x li| when buying from firm i. Here the distance between consumer and firm is the arc distance on the circle (that is consumers move on the circle). Suppose that all consumers are active in the market. (a) Determine the demand function of firm i as a function of all prices. (b) Determine equilibrium prices in the game in which all firms set prices simultaneously. (c) How do transport costs affect profits? (d) What do we know from the theoretical or empirical literature about product differentiation? Can one argue that the industry's conduct, in which price competition is avoided and rivalry focuses on new brand introductions, tends to deter entry and protect profits? Please cite and briefly summarize relevant paper(s) that you have read on the topic