Firms can choose a location in the linear city of length 1 with fixed cost of 25. Consumer density at any location x in the linear city is 400. a) Show that a firm each at 0.125, 0.375, 0.625 and 0. 875 is not an equilibrium. b) What is the equilibrium number of firms and th6ir locations? c) Illustrate how entry is no longer profitable at equilibrium?

Firms can choose a location in the linear city of length 1 with fixed cost of 25. Consumer density at any location x in the linear city is 400. a) Show that a firm each at 0.125, 0.375, 0.625 and 0. 875 is not an equilibrium. b) What is the equilibrium number of firms and th6ir locations? c) Illustrate how entry is no longer profitable at equilibrium?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter14: Monopolistic Competition And Product Differentiation

Section: Chapter Questions

Problem 10P

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