To firms compete and they are placed in each end of a line

Reference no: EM13378840

To firms compete, and they are placed in each end of a line with length 1. Firm 1 at point 0 and firm 2 at point 1. The consumers transportation cost are linear in the distance to the firms localisation (d1 and d2) and the consumers are uniformly distributed on the intervall (0,1) where x E (0,1) denotes the consumers preferences. The consumer buys maximum one unit of the good, either from firm 1 or from firm 2. The utility of consumer x from the good from firm i is: \(u = s-p_{i}-t|x-d_{i}|\)

where s is the maximum willingness to pay and t transportation cost per distance unit between the consumer and the firm's localisation.

The firms have constant marginal costs given by c1 and c2.

a) FInd the two firm's reactionfunctions pi = Ri(pj) and give a graphical illustration

b) Find the two Nash-equilibrium prices as a function of the marginal costs c1 and c2, and the firm's profit.

Reference no: EM13378840

Questions Cloud

Grow fertilizers company purchases a gravity settling tank : grow fertilizers company purchases a gravity settling tank of the 30000 purchase price. the company finances 30 of the

Derive the marginal rate of substitution mrs between x and : derive the marginal rate of substitution mrs between x and yuxyaxp1-ayp1puxylnxy uxyxaxalphaybetay

1 the primary reason for the creation of the federal : 1 the primary reason for the creation of the federal reserve system wasa the desire to reduce or eliminate bank

You are a manager in one department of the xyz : you are a manager in one department of the xyz manufacturing company. you have been invited to a meeting by the general

To firms compete and they are placed in each end of a line : to firms compete and they are placed in each end of a line with length 1. firm 1 at point 0 and firm 2 at point 1. the

Suppose that a researcher using wage data on 250 randomly : suppose that a researcher using wage data on 250 randomly selected male workers and 280 female workers estimates the

Stan sewell paid 50000 for a franchise that entitled him to : stan sewell paid 50000 for a franchise that entitled him to market software programs in the countries of the european

The bank account as a control device that helps to protect : the bank account as a control device that helps to protect cash. one of the requirements is to conduct periodic bank

You are a assistant for tyler corporation it is mid-january : you are a assistant for tyler corporation. it is mid-january 2011 and you are helping to prepare the tyler corporations

User Account

All Pages