Revision De Articulo "Dude"

Dudey in competition by choice seeks to explain how firms choose location when they know how consumer search patterns will be affected by their location decisions. Also he seeks to explain the reasonbehind the clustering of competitive firms.
In order to do this a location-search game was developed. The game would help study the tension between the incentives that firms have to clustertogether.
In the game there are finite consumers and the firms do no choose price, they only choose quantity and location. Also there are barriers to entry into the industry. The firms will produce at thesame constant marginal cost and consumers have identical demand functions. This will make the game simpler because we wont have to take into consideration too many variables. A subgame perfectequilibria was used to solve the game which requires that firms play a Cournot quantity-setting game.
Dudey found that under reasonable conditions, there is a unique, subgame perfect equilibrium in whichall firms locate in the same location. The model can be used to explain why competitive firms tend to cluster together in one location However, the cost of transportation is not included in this modeland it is assumed that consumers know of prices only by visiting the firms.
The author suggests five propositions to explain his assumptions. Proposition one explains why competitive firms decide tocluster together in the same location even though this will intensify competition. According to the findings the reason why firms prefer to cluster together and accept such intense competition isbecause if a firm chooses to separate from others the consumer will assume that such firm will charge the monopoly price.
Proposition two says that if (1,y) < (n/y)(1,y + 1) holds then all firmsshould cluster together. This condition also shows that firms don’t lose that much by clustering together but actually might increase their profit. The reason why is because consumers in order to...