Question

QUESTION 6 Consider the Hotelling model of the competition between two firms discussed in class. Select all that apply. a.If both firms are localized in position 1/2 (i.e., center of the line), neither firm has incentives to deviate and move to a different position. D. If Firm 1 is located at position 1/2 (i.e., center of the line) and firm 2 is located somewhere else, then both firms have incentives to deviate and change their position along the line. C. If Firm 1 and Firm 2 localize at the same point along the line, they will each sell to 50% of the consumers. | d. In the Nash Equilibrium in pure strategies firms will localize together anywhere along the line.

Answer 1

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