Consumer have to buy ice cream from nearest shop, suppose there is a only one vender and he want maximum customer so vender will open shop at mid-point of broad walk so shop will be close to maximum number of customer. When vender move from mid-point to left or right closeness to customer will start fall and at the right and left corner vender will get minimum no of consumer.
When two vender simultaneously choose a location both will choose mid-point because it is given maximum no of customer. And if both of them choose mid-point location then they have to divide market equally. So both will lose half market. So mid-point a Nash equilibrium point where each vender have half market.
A question of game theory 2. Imagine that a large number of consumers are uniformly distributed...
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...
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...
Problem 2. Two independent ice cream vendors own stands at either end of a 4 mile long beach. Everyday there are 400 beach-goers who come to the beach and distribute themselves uniformly along the water. Every beach-goer wants exactly one ice cream during the day, and values the ice cream from both stands at $10. All of the beach-goers would rather be sunbathing or in the water, so they have a disutility to walking on the beach of $0.25 per...
Problem 2. Two independent ice cream vendors own stands at either end of a 4 mile long beach. Everyday there are 400 beach-goers who come to the beach and distribute themselves uniformly along the water. Every beach-goer wants exactly one ice cream during the day, and values the ice cream from both stands at $10. All of the beach-goers would rather be sunbathing or in the water, so they have a disutility to walking on the beach of $0.25 per...
Problem 2. Two independent ice cream vendors own stands at either end of a 4 mile long beach. Everyday there are 400 beach-goers who come to the beach and distribute themselves uniformly along the water. Every beach-goer wants exactly one ice cream during the day, and values the ice cream from both stands at $10. All of the beach-goers would rather be sunbathing or in the water, so they have a disutility to walking on the beach of $0.25 per...
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...
Consider a market in which consumer type x is uniformly distributed on the unit interval. Consumers demand 0 or 1 unit (they buy at most one unit overall in the market). Firm A is located at 0 and firm B at 1. Firms incur constant marginal costs of production c = 1/2. There is mass 1 of consumers. A consumer located at x ∈ [0;1] obtains utility ux = r−x−pA if she buys from firm A; ux = r−(1−x)−pB if...
Pricing is provided in the question. 1. Pricing along the mile-long road (30 points) Two stores selling bottled water, Goodwater and Sweetwater are located at the two extreme ends of a mile-long road. 100 customers are uniformly distributed along this road. The problem faced by the two stores here has to do with the pricing of bottled water. Owners of the two stores are aware of the following: (Figure 1) • Sweetwater charges Ps per bottle and Goodwater charges PG...