Question

Find the equilibrium locations if there are five firms competing over locations in the Hotelling linear city (firms choose locations simultaneously, product space is the unit interval, prices are fixed, and there is uniform distribution of consumers on the unit interval). please give me a detailed solution,thanks

Answer 1

ANSWER: Here "Linear city" refers to the interval in which the consumers are get diffused in uniform manner along this particular interval. If there are 5 firms situated at each boundary those who sells the same product. One and only difference among those 5 firms is their location. Here C= Cost per unit of the product which is left upto the customer whether he pays or not. For suppose if in case anyone of the customer is at a particular distance say 'x' to one of the seller's then its transportation cost will be t*x2. Therefore this cost will represents the value of the time, gasoline or adaption to any commodity etc.. Consumers generally will have the unit demands, and they will buy at most of unit of the commodity.