Economic

Consider a street with 5 evenly spaced residential regions (regions 1-5 as shown in Chapter 8). Each region has 100 residents. Two food trucks decide where to locate sequentially. First, food truck A chooses a location. Food truck B observes the location choice of food truck A, then chooses where to locate. S = (1, 2, 3, 4, 5), for i E {A, B]. Each resident goes to whichever stand is closer to buy food. Each food truck makes $1 in profit per customer. The trucks can locate in the same region. Half the customers go to each stand when the distance is the same. . Find the subgame perfect Nash equilibrium of this game. . Where will the two food trucks locate in equilibrium