What are the optimal prices for the two firms

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Two firms that produce an identical product are located at each end of a street of length 10. There are consumers uniformly distributed along this street who value the product at V = 50 and desire at most one unit of the product. The marginal costs of producing this product are constant and equal to 10 for each firm. Consumers have to pay there-and- back transportation costs of t = 3 per unit of distance (that means the transportation cost function will be 6x for a consumer located at distance x from the shop). What are the optimal prices for the two firms?

Reference no: EM13886492

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