Supposed there are two different type of firms. All firms have U-shaped average cost curves, where n firms have average costs of AC(q) and m firms have average costs of AC(q) + K. There are two types of consumers: the natives have zero search costs, and the tourists have very high search costs. Describe the resulting equilibrium.
Supposed there are two different type of firms. All firms have U-shaped
average cost curves, where n firms have average costs of AC(q) and m firms have average costs of AC(q) + K. There are two types of consumers: the natives have zero search costs, and the tourists have very high search costs. Describe the resulting equilibrium.
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