Two firms, firm 1 & firm 2, find themselves situated in Hotelling Street, firm 1 at the very ... Two firms, firm 1 & firm 2, find themselves situated in Hotelling Street, firm 1 at the very beginning of the street and firm 2 at the very end of the street. There are N = 2,000 customers each buying 1 unit of the good from the firm with lower full price (for that customer), i.e., the price charged at the location (p1 or p2) plus transportation cost to get to that location. Full price = pi + t × (distance to firm i), where t is transportation cost per length of the street. Firm 1 has flat marginal cost MC1 = $10/unit (no fixed cost). Firm 2 has flat marginal cost MC2 = $15/unit (no fixed cost). Assume t = $4. The firms each maximize their own profits in a Bertrand duopoly. Find 11. Equilibrium quantity q2 firm 2 sells. 12. Equilibrium profit π1 firm 1 earns. 13. Equilibrium profit π2 firm 2 earns
Two firms, firm 1 & firm 2, find themselves situated in Hotelling Street, firm 1 at...
Two firms compete in a Bertrand-Hotelling fashion in the sale of Soma. 1000 customers are uniformly distributed on the line between 0 and 1. Firm 1 is at the left endpoint, i.e. at 0 and the firm 2 at the right endpoint, i.e. at 1. Travel costs for consumes are $1 a unit per mile. If firm i produces qi units it incurs a production cost of 0.5qi^2. There is a new technology that will change the production costs of...
2. Consider a version of the Hotelling model in which prices are endogenously determined. Two firms sell horizontally differentiated products located at opposite ends of the one-dimensional product space. Firm O is located at 0. Firm 1 is located at 1. M consumers are uniformly distributed between 0 and 1, with each consumer's location giving his most preferred type of product. Each consumer places value v on one unit of his most preferred product, but incurs a transportation cost. AD...
There are two firms. Firm 1 (or, a small firm) produces a single product, product A, at zero cost. Firm 2 (or, a big firm) is a multi-product firm that sells both products A and B. Firm 2 is less efficient in producing A. It incurs a constant marginal cost c > 0 for producing A. However, firm 2 is a monopolist of the market of product B and its cost of producing product B is zero. A unit mass...
Two firms produce closely-related products and have marginal costs MC1=10 and MC2=20. The market supplied by firm 1 has demand Q1=100-2p1+p2, while 2's market has demand Q2=100+p1-2p2. The two firms are engaged in Bertrand price competition. Two firms produce closely-related products, and have marginal costs MC1-10 and MC2-20. The market supplied by firm 1 has demand Q1 = 100-2p1+P2, while 2's market has demand Q2=100+p1- 2p2. The two firms are engaged in Bertrand price competition. 3(a)What is the intercept of...
The market demand curve for a pair of duopolists is given as P=100- Q where Q= Q1+ Q2. The constant per unit marginal cost is 0 for firm 1 and c for firm 2 where c is some number. Find the equilibrium price, quantity and profit for each firm in the Bertrand model as a function of c a. Equilibrium price equals P=0. Equilibrium quantity is Q1=Q2=10 with both earning Π1=Π2=0. Which one is correct? ---C= 0 OR C>0 b....
P=100-2Q where Q is total quantity demanded for both firms 1 and 2, respectively. The firms 1 marginal cost is given by MC1(Q1)=2Q1. The firms 2 marginal cost is given by MC2(Q2)=4Q2. Based on this information firm 1 and firm 2's reaction functions are?
P=100-2Q where Q is total quantity demanded for both firms 1 and 2, respectively. The firms 1 marginal cost is given by MC1(Q1)=2Q1. The firms 2 marginal cost is given by MC2(Q2)=4Q2. Based on this information firm 1 and firm 2's reaction functions are?
5. (30 points) Consider a Hotelling line city model, where two firms are located at the two extreme points. The length of the city is 1, and the consumers are evenly distributed over the line. Transportation cost per unit is t. The utility of the good for each consumper is 2 and each consumer only consumes one unit of good. Consumer's utility is zero without purchase. Suppose price charged by fir i 1; 2) is pi a). (10 points) Determine...
Two firms produce closely-related products, and have marginal costs MC1=10 and MC2=20. The market supplied by firm 1 has demand Q1=100-2p1+p2, while 2's market has demand Q2=100+p1-2p2. The two firms are engaged in Bertrand price competition. 3(a)What is the intercept of firm 1's price reaction curve? (One digit after the decimal point only) 3(b) What is the slope of firm 1's price reaction curve? (One digit after the decimal point only) 3(c) What is the intercept of firm 2's price...
Question 7 1 pts Two firms produce closely-related products, and have marginal costs MC1=10 and MC2=20. The market supplied by firm 1 has demand Q1=100-2p1+P2, while 2's market has demand Q2=100+p1-2p2. The two firms are engaged in Bertrand price competition. 3(a)What is the intercept of firm 1's price reaction curve? (One digit after the decimal point only) Question 8 1 pts 3(b) What is the slope of firm 1's price reaction curve? (One digit after the decimal point only) Question...