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Compute the social optimum positions

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Recall the Hotelling (1929) ice cream vendor example. Let (x1, x2) denote the position of the vendors. A natural social welfare function, in this setting is the average distance walked by people to purchase their ice cream. Compute the social optimum positions (x ∗ 1 , x∗ 2 ), justifying your answer as rigorously as possible, and briefly compare the above welfare criterion to Pareto optimality.

Reference no: EM133133556

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