Considering Hoteling's linear city with endogenous prices and endogenous ( symmetric) location ( hint: firm 2 position itself symmetric to firm 1 in location a and ( 1-a) . Two firms produce two homogenous products with value v=30. let assume that consumers face a quadratic transportation cost with t=1

question 2 :

compute optimal quantity produced for each of the firms in the game where firms in there where firms simultaneously first choose location and then compete in prices

a ) q 1 = q 2 =12

b) q 1 = q2 = 1

c ) all the other solutions are wrong

d ) q =1 , q 2 = 0