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Please Solve Complete all Parts I Will Upvote You Consider a Hotelling model with two firms located 1km apart at opposite ends of a linear
Please Solve Complete all Parts I Will Upvote You
Consider a Hotelling model with two firms located 1km apart at opposite ends of a linear city. Firm 0 is located at point 0 , and firm 1 is located at point 1. Both firms have the same marginal cost of production of 1. There are 100 consumers in this market who suffer a disutility of 2 for each km of travel. (a) Find the indifferent consumer and the profit function for each one of the firms. (b) Find the NE of the game (prices, market share, and profits) (c)Now suppose Firm 0 invests in a technology that reduces consumers' transportation cost to 1 . Find the indifferent consumer and compare it with the one obtained in part (a). Briefly explain (d)Find the NE of the game (prices, market share, and profits). Comparing the firms' equilibrium profits with the ones obtained in part (b), are firms better or worst-off? Briefly explain. (e)Briefly explain what will be the equilibrium prices if consumers do not suffer disutility from traveling. Consider a Hotelling model with two firms located 1km apart at opposite ends of a linear city. Firm 0 is located at point 0 , and firm 1 is located at point 1. Both firms have the same marginal cost of production of 1. There are 100 consumers in this market who suffer a disutility of 2 for each km of travel. (a) Find the indifferent consumer and the profit function for each one of the firms. (b) Find the NE of the game (prices, market share, and profits) (c)Now suppose Firm 0 invests in a technology that reduces consumers' transportation cost to 1 . Find the indifferent consumer and compare it with the one obtained in part (a). Briefly explain (d)Find the NE of the game (prices, market share, and profits). Comparing the firms' equilibrium profits with the ones obtained in part (b), are firms better or worst-off? Briefly explain. (e)Briefly explain what will be the equilibrium prices if consumers do not suffer disutility from travelingStep by Step Solution
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