Economic Assignment 4

1 . Consider the Salop circular model with the circumference 1 . The .firms cost functions argon C (q 1 /8 (no peripheral costs . Consumers incur transportation costs of 2 d from traveling a distance d : Each consumer buys 1 unit of the product and gets utility 10 from consuming it . The firms invade in a two-stage game : they decide whether to enter and what localisation to choose in the first stage , and what determine to coiffure in the second stage (a ) Suppose there are N .firms in the market . If .firm 1 is located at the top of the passel , what are holes of the other .firms ? Show them on the circle and explain (no calculations neededNote that the distance between firms in the circle is oppose .

If firm A is located at the top , thence the rest of the firms are located equidistant of A s location (when n N (b ) Solve for the labyrinthine sense price and the bout of firms , which enter the market . Given this number , what is the equilibrium price ? Assuming N firms in the marketN 3 note that the consumer inevitably to travel twice in two distances meaning trio firms are located in the circleP c t /N 1 /8 2 /3 19 /24For the equilibrium price :1 p223 .N. The prices offered by firm A is equal to the prices offered by the rest of the firms . In this situation , the firms cannot discriminate prices Equilibrium...If you command to get a full essay, order it on our website: Ordercustompaper.com

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