Two amusement parks (Park 1 and Park 2) are located on an island 1km apart. A new firm is offering to sell exclusive rights to new technology, reducing the marginal cost by $6 per customer. However, about 20% of parks encounter compatibility issues, and the marginal cost is only reduced by $1.50 per customer. However, there is no way to know whether these issues will be encountered.
7200 people visit one park once. The customer's homes are spread evenly across the island and suffer a disutility of $20 for each kilometre they travel to reach the park. With their current technology, each park has a marginal cost of $11, an equilibrium price of $31 and a profit of $72,000.
NOTE: Treat this market as a one-shot game.
What type of oligopoly is this (Cournot, Bertrand or Stackelberg)? (please provide an explanation for why)
What is the expression for the location of the indifferent consumer? (please provide all steps)
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