Consider a main street, which is 1 mile long. There are N people uniformly distributed along...
Consider a main street, which is 1 mile long. There are N people uniformly distributed along the main street. Each customer either buys one unit of product from one of the two firms located at either end of the main street every day or buys nothing. If a customer buys no product, her utility will be zero. Each customer’s reservation utility of consuming this product is $V. Each customer’s there and back transportation cost is $t per mile. Suppose that Firm 1 is located at the left-end of the street and Firm 2 is located at the right-end of the street. Let the marginal cost of producing one unit of product is $c for both firms. Identify the equilibrium prices and profits when these two firms choose their prices simultaneously. Note that you must consider all values of V.
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Consider a main street, which is 1 mile long. There are N people
uniformly distributed along...
In Tuftsville, everyone lives along Main Street, which is 10 miles long. There are 1,000 people...
In Tuftsville, everyone lives along Main Street, which is 10 miles long. There are 1,000 people uniformly spread up and down Main Street, and every day they each buy a fruit smoothie from one of the two stores located at either end of Main Street. Customers ride their motor scooters to and from the store using $0.50 worth of gas per mile. Customers buy their smoothies from the store offering the lowest price, which is the store’s price plus the...
9 and10 9. Customers are uniformly located along a street with unit length (the left end...
9
and10
9. Customers are uniformly located along a street with unit length (the left end is 0 and the right end is 1). Each of them wants to buy one unit of a good. The transportation cost of customers is c dollars per unit length. Firms have same production cost and the market price is fixed at some level above the production cost. (a) Let there be 4 firms. (i) Find the equilibrium locations of firms (ii) Is the...
1. Two firms compete in a linear city of length 1 unit. Consumers are uniformly located...
1. Two firms compete in a linear city of length 1 unit. Consumers are uniformly located along the city. Consumer i's utility derived from buying firm j's product is given by jj-(-x)2-Pj where j 1,2 indicate the two firms, t is the per unit cost of travelling along the city, is the location of consumer i, x is the location of firm j, and pj is the price of product j. Product one contains some intrinsically superior features and 22,...
9) In Hotelling's linear city (address model where consumers are uniformly distributed over a line of...
9) In Hotelling's linear city (address model where consumers are uniformly distributed over a line of size 1), suppose there are two firms located at the two opposite ends with constant marginal cost c. Consumers utility is given by V- tx2-p, where is per unit transportation cost, x is consumer's distance to a firm, V is the value of consuming the good and p is the price of the good. If firms compete by choosing prices, what is the Nash...
2. Consider a version of the Hotelling model in which prices are endogenously determined. Two firms...
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...
Consider a market in which consumer type x is uniformly distributed on the unit interval. Consumers...
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...
Consumers live uniformly in a "linear-1-mile city". There are two firms, located at r-0 and r...
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...
Pricing is provided in the question. 1. Pricing along the mile-long road (30 points) Two stores...
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...
16:29 Back Problem Set 2 ECON 461 Problem Set 2 Summer 2019 Each qustion will receive...
16:29 Back Problem Set 2 ECON 461 Problem Set 2 Summer 2019 Each qustion will receive equal weight in grading 1. Consider a duopoly in which two firms produce difierent varieties of a differentiated product at constant average and marginal cost 4 per unit. Let the equations of the inverse demand curves be P 700- 7 P-200- +9 (both equations valid wheree the implied prices and quantities are nonnega tive) (a) find Nash equilibrium prices, quantities, and payoffs for a...
2) Consider a location model of differentiated products where the set of possible products is the...
2) Consider a location model of differentiated products where the set of possible products is the line segment [0,11 and consumers are uniformly distributed along the line segment. Transportation costs in this model are equal to td, where d= |x- is the distance between the consumer's ideal variety and the variety she purchases. If a consumer with ideal variety x* purchases variety x at price p, then her utility is If the consumer does not purchase the good her utility...
9
and10
9. Customers are uniformly located along a street with unit length (the left end is 0 and the right end is 1). Each of them wants to buy one unit of a good. The transportation cost of customers is c dollars per unit length. Firms have same production cost and the market price is fixed at some level above the production cost. (a) Let there be 4 firms. (i) Find the equilibrium locations of firms (ii) Is the...
1. Two firms compete in a linear city of length 1 unit. Consumers are uniformly located along the city. Consumer i's utility derived from buying firm j's product is given by jj-(-x)2-Pj where j 1,2 indicate the two firms, t is the per unit cost of travelling along the city, is the location of consumer i, x is the location of firm j, and pj is the price of product j. Product one contains some intrinsically superior features and 22,...
9) In Hotelling's linear city (address model where consumers are uniformly distributed over a line of size 1), suppose there are two firms located at the two opposite ends with constant marginal cost c. Consumers utility is given by V- tx2-p, where is per unit transportation cost, x is consumer's distance to a firm, V is the value of consuming the good and p is the price of the good. If firms compete by choosing prices, what is the Nash...
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...
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...
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...
16:29 Back Problem Set 2 ECON 461 Problem Set 2 Summer 2019 Each qustion will receive equal weight in grading 1. Consider a duopoly in which two firms produce difierent varieties of a differentiated product at constant average and marginal cost 4 per unit. Let the equations of the inverse demand curves be P 700- 7 P-200- +9 (both equations valid wheree the implied prices and quantities are nonnega tive) (a) find Nash equilibrium prices, quantities, and payoffs for a...
2) Consider a location model of differentiated products where the set of possible products is the line segment [0,11 and consumers are uniformly distributed along the line segment. Transportation costs in this model are equal to td, where d= |x- is the distance between the consumer's ideal variety and the variety she purchases. If a consumer with ideal variety x* purchases variety x at price p, then her utility is If the consumer does not purchase the good her utility...
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