In this lecture we complete our analysis of product differentiation, looking at location choice, welfare, discriminatory equilibria, product proliferation and some empirics. Lecture 7

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# Lecture 7: More on product differentiation

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In this lecture we complete our analysis of product differentiation, looking at location choice, welfare, discriminatory equilibria, product proliferation and some empirics. Lecture 7

On slide 6 I don’t understand how you calculated the result for B’s FOC, I can’t work out why there is a +2t(b-a) on the top half of the fraction. Can you explain, please? Thanks.

These are last year’s slides… The expressions for pA and pB are not perfectly symmetric because the demand for firm B is 1-x* rather than x*.

This example appears to be more complex, so is probably better to work from.

I’m fine with finding the value of x*, I just don’t understand how to calculate 1-x*. – I still don’t understand the +2t(b-a).

Come to my office hours on Thursday, and we’ll go through this together. It’s a bit much to go through here.

Thanks….But Thurs is the day before the test.