1. In the circular location model, a) how does the position of the marginal consumer between...

 

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1. In the circular location model, a) how does the position of the marginal consumer between any two firms depend on the total number of firms on the market? Explain mathematically and intuitively. b) How does the position of the marginal consumer between any two firms depend on the transportation cost's (linear) parameter "t"? Explain mathematically and intuitively. c) Explain mathematically and intuitively why the circular location model allows us to conceptualize the fact that established firms can release many variants of the same good to deter entry? d) Do you think that this conclusion would change, if we allowed firms on the circular location model to have various degrees of quality and therefore different production costs and prices? Explain mathematically and intuitively how the main results may change? Do the same also, if you believe that the main results would not change. 1. In the circular location model, a) how does the position of the marginal consumer between any two firms depend on the total number of firms on the market? Explain mathematically and intuitively. b) How does the position of the marginal consumer between any two firms depend on the transportation cost's (linear) parameter "t"? Explain mathematically and intuitively. c) Explain mathematically and intuitively why the circular location model allows us to conceptualize the fact that established firms can release many variants of the same good to deter entry? d) Do you think that this conclusion would change, if we allowed firms on the circular location model to have various degrees of quality and therefore different production costs and prices? Explain mathematically and intuitively how the main results may change? Do the same also, if you believe that the main results would not change.

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ANSWER Introduction The problem of fixing the need for instinct which is actually defined as being a... View the full answer