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There is a street of 10 miles long. There are 1000 people uniformly distributed in the street. Customers can travel at a cost of $0.5

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There is a street of 10 miles long. There are 1000 people uniformly distributed in the street. Customers can travel at a cost of $0.5 per mile. All customers buy from the store which has the lowest total cost (price + travel cost). Store 1 locates at the \"west\" end of the street and store 2 locates at the east end of the street. The marginal cost of the two stores are both constant at $1. Store 1 set his price p1 first, followed by Store 2 who sets p2. ** Part a (10 marks) Let x be the location of a customer who is indifferent from buying from the two stores. Find x E [0, 10] as a function of p1 , p2. ** Part b (10 marks) Find the profit function of Store 2 as a function 21:2(p1, p2). ** Part c (10 marks) Find the best response of Store 2 given p1 . ** Part cl (10 marks) Solve the equilibrium p1 ,pz. ** Part 9 (10 marks) Now suppose that instead of presuming that Firm 1 decides the price first, the two firms may bid to become the leader. Would he do so

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