Difficulty: Medium
Category: Game Theory & Logic
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Topics: game-theory, equilibrium, hotelling-model, spatial-competition
Two ice cream vendors, Alice and Bob, are setting up stands on a beach of length 1. The beach is represented by the interval 0, 1. Customers are uniformly distributed along the beach and will always go to the closest vendor. Alice and Bob simultaneously choose their locations. Assuming both vendors aim to maximize their market share, where will they locate in equilibrium?
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