Game Theory class 5. HOTELLING COMPETITION (16 POINTS) Consumers are uniformly distributed along a boardwalk that...
Game Theory class 5. HOTELLING COMPETITION (16 POINTS) Consumers are uniformly distributed along a boardwalk that is 1 mile long. They all like ice cream the same and dislike walking the same. Prices are regulated and equal for every vendor. The cost of producing ice cream is zero. If more than one vendor is at the same location, they split the business evenly (similarly, if two vendors are at the same distance, the consumer goes to each of them with...
A question of game theory 2. Imagine that a large number of consumers are uniformly distributed along a boardwalk that is 1 mile long. (Hint: "Uniformly distributed" is a mathematical expression which refers to the uniform distribution of a continuous random variable. In this exercise, it essentially describes a situation such that half of the consumers are located along the first half mile of the boardwalk, and the other half of the consumers are located along the second half of...
Consumers live uniformly in a "linear-1-mile city". There are two firms, located at r-0 and r - 1, which each produce the same physical good at marginal cost of c > 0. Consumers have transportation cost t per unit of distance. Firms are competing for customers by selecting their prices pı 2 0 and p2 2 0. It is assumed that each consumer will buy exactly one unit of the product. Firm 1 Consumer at r Firm 2 cost of...