1. Suppose that there are two types of firms. Both types have U-shaped average cost curves where n firms have average costs of AC(q) and m firms have average cost curves of AC(q) + k. There are two types of consumers: (1) the natives who have zero search costs; and (2) the tourists who have very high search costs. Describe the resulting equilibrium.
2. Determine the equilibrium prices, quantities, and number of high- and low-price stores in the tourist-and-native model if consumers have downward-sloping, linear demand curves of the form q = a - bp, where a and b are positive constants.

Can someone help me answer 2?