On a [0.1] linear segment, two firms A and B selling the same good are located symmetrically at locations L and 1-L respectively, where L-0.1. Both firms have a marginal cost of zero. Consumers are distributed uniformly on the interval (0,1]. The market is of size 1. When buying from a firm located a distance d from them, at a price p, a consumer receives utility U = 10 - 4d -p. INote that the disutility of transportation is linear in the distance.) Each consumer buys from one unit from the firm yielding the highest level of utility for them. Firms choose the price to charge simultaneously. In the Nash equilibrium, how much profit does Firm B make? Enter below a numerical value. Round to the second decimal if necessary.

On a [0.1] linear segment, two firms A and B selling the same good are located symmetrically at locations L and 1-L respectively, where L-0.1. Both firms have a marginal cost of zero. Consumers are distributed uniformly on the interval (0,1]. The market is of size 1. When buying from a firm located a distance d from them, at a price p, a consumer receives utility U = 10 - 4d -p. INote that the disutility of transportation is linear in the distance.) Each consumer buys from one unit from the firm yielding the highest level of utility for them. Firms choose the price to charge simultaneously. In the Nash equilibrium, how much profit does Firm B make? Enter below a numerical value. Round to the second decimal if necessary.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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