I need the first three, second image for additional information.
Interest Group Analysis: Now, consider possible coffee regulation. The single euro price is such an established tradition that no one will consider changing it. But, some enterprising legislators are considering regulating the location of the two coffee bars on the plaza. 1) If the legislature wants to maximize consumer surplus, where will it choose to force the two businesses to locate? 2) Who has the strongest incentives to fight against such a regulation? Who would fight for it? Based on what we spoke about in class, how likely is it that such support or opposition would succeed. 3) What location regulation would BarUno advocate for? What about BarDue? Do you expect them to succeed? (Hint: regulations can be bar specific). What coalition could BarUno try to develop to advocate for its preferred location regulation? Business Location Game: Two businesses would like to sell coffee in Rome, but the price of coffee is set at 1 euro by the government (this is approximately true, by the way). Assume the cost per unit is zero. They will both locate on a single plaza and offer the exact same product. But, people do not like walking; the farther you walk for the espresso the less utility you get from it. Specifically, the value of an espresso is given by 10-(x-b)^2-p, where x is your location, b is the location of the bar, and p is the price of the espresso. Assume customers are located uniformly along a segment of the (linear) plaza from zero to 1, and assume one firm (BarUno) must locate between point 0 and point %, while the other (BarDue) locates between 7 and 1. Assume 100 total customers, but assume that customers are infinitely divisible. 1) What will the profit of each business be if they both locate in the middle of the plaza? 2) What will the profit of each business be if they locate at the extreme ends of the plaza? 3) What location will they choose if they simultaneously select a location (i.e. what is the Nash equilibrium). Interest Group Analysis: Now, consider possible coffee regulation. The single euro price is such an established tradition that no one will consider changing it. But, some enterprising legislators are considering regulating the location of the two coffee bars on the plaza. 1) If the legislature wants to maximize consumer surplus, where will it choose to force the two businesses to locate? 2) Who has the strongest incentives to fight against such a regulation? Who would fight for it? Based on what we spoke about in class, how likely is it that such support or opposition would succeed. 3) What location regulation would BarUno advocate for? What about BarDue? Do you expect them to succeed? (Hint: regulations can be bar specific). What coalition could BarUno try to develop to advocate for its preferred location regulation? Business Location Game: Two businesses would like to sell coffee in Rome, but the price of coffee is set at 1 euro by the government (this is approximately true, by the way). Assume the cost per unit is zero. They will both locate on a single plaza and offer the exact same product. But, people do not like walking; the farther you walk for the espresso the less utility you get from it. Specifically, the value of an espresso is given by 10-(x-b)^2-p, where x is your location, b is the location of the bar, and p is the price of the espresso. Assume customers are located uniformly along a segment of the (linear) plaza from zero to 1, and assume one firm (BarUno) must locate between point 0 and point %, while the other (BarDue) locates between 7 and 1. Assume 100 total customers, but assume that customers are infinitely divisible. 1) What will the profit of each business be if they both locate in the middle of the plaza? 2) What will the profit of each business be if they locate at the extreme ends of the plaza? 3) What location will they choose if they simultaneously select a location (i.e. what is the Nash equilibrium)
