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Firm 1 has a single retail location at the left hand extreme point of a mile-long Main Street while firm 2 is located at the right hand extreme. There are 100 consumers who are evenly distributed over this market. The value of the product sold is V=$10 to any consumer. The marginal cost of production is $1.40 to firm 1 and $3.20 to firm 2. The transportation cost is $1 per mile.

1. What is the Nash equilibrium price charged by firm 1?

2. What is the Nash equilibrium price charged by firm 2?

3. In Nash equilibrium, Firm 1 makes a profit of ?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9698906

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