Question
Suppose that two firms compete on the basis of location. At intersection A there are 10 customers, at intersection B there are 5 customers, and
Suppose that two firms compete on the basis of location. At intersection A there are 10 customers, at intersection B there are 5 customers, and at intersection C there are 12 customers. Each firm locates at 2 intersections. A firms profit is equal to the number of customers at any intersection where it is the monopoly less the number of customers it loses at the intersection where it is not located. Illustrate the strategic form game box and find the dominant strategy equilibrium (if any). Show how you calculated the payoffs. Note: this is not a Hotelling location game; derive the payoffs as described above.
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