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In the Salop model the price for a firm in a symmetric equilibrium is p(n) = c+ where C is the marginal cost, T is
In the Salop model the price for a firm in a symmetric equilibrium is p(n) = c+ where C is the marginal cost, T is the transportation cost for consumers and n is the distance between two neighbouring firms such that 72 is the number of firms in the industry. The zero profit condition that determines the number of firms in a free entry equilibrium is (p(n) - c)_ - e = 0 where e is the exogenous sunk cost for a firm to enter the industry. Suppose T = 100 and e - 4. The number of firms in the free entry equilibrium is (numeric). A/
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