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Lecture19_Hotelling_Econ121_Fall2010 (3)

Lecture19_Hotelling_Econ121_Fall2010 (3) - Lecture 19 The...

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Click to edit Master subtitle style  2/2/11 Lecture 19 The Hotelling Model Econ 121: Industrial Organization UC Berkeley Fall 2010 Prof. Cristian Santesteban
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 2/2/11 Overview The Hotelling Model Location Choice with Fixed Prices and Firms Location Choice with Fixed Prices and Free Entry Endogenous Pricing with Fixed Firms and Locations
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 2/2/11 The Hotelling Model Three cases we will consider: Case 1: For a fixed number of firms and prices , firms choose where to locate Principle of Minimum Differentiation Case 2: For fixed prices but free entry , firms choose where to locate Principle of Maximum Differentiation Case 3: Firms choose prices and the
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 2/2/11 The Hotelling Model: Case 1 N firms Marginal cost c Price p Unit interval Uniform distribution of consumers with density M This means that the number of consumers between in one-quarter of the space is M/4.
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 2/2/11 The Hotelling Model: Case 1 Profits for firm i = (p-c) MLi
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