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Two rms choose positions in the interval [0, 2]. They sell the same good, the price of which is 1; each rm's cost is 0.

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Two rms choose positions in the interval [0, 2]. They sell the same good, the price of which is 1; each rm's cost is 0. Consumers are distributed uniformally on the interval [0, 2]. Every consumer who is located at most the distance d from some rm buys one unit of the good from the rm closest to her. If the rms are equidistant, the consumer buys half a unit from each rm. Consumers who are located more than distance d from a rm do not buy any units of the good. If rms 1 and 2 are located at different positions, rm 1's prot is the fraction of consumers who are located (a) at most distance d from rm i and (b) closer to rm 1' than rm j where i E {1, 2} and i 75 j . If the locations are the same, each rm's prot is half of the fraction of consumers who are located at most distance d from the rms' common location. Each rm seeks to maximize its prots. a) [ 5 points ] Formulate this situation as a strategic game. Be sure to specify players, actions, and preferences. b) [ 15 points ] Find all pure strategy Nash Equilibria of this strategic game assuming d = % Be sure to justify your

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