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hotelling model Two maximising profit firms, firm 1 and firm 2 produce identical good. The market demand curve is =1303 =1+2. The firms have Suppose
hotelling model Two maximising profit firms, firm 1 and firm 2 produce identical good. The market demand curve is =1303 =1+2. The firms have Suppose consumers, each with unit demand, are uniformly distributed along a 1-mile road. Two price-setting firms 1 and 2 are located at each end of the street: firm 1 at 0 and firm 2 at 1.Consumers face a travel cost of 0.1 per mile. Marginal production cost of firm 1 is $0.50 and that of firm 2 is $1.50. Find out the reaction functions and equilibrium prices.
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