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Each individual consumer is prepared to shell out at most $mathrm v =35 €$ to get a cake and he/she wishes to get at most one particular unit. Each individual consumer bears a disutility in consuming an item that does not have strictly preferred features. Think this disutility equals $t=two$ per unit of distance. The marginal fees of the two corporations are equal $c_ B C =c_ E C =twelve$. Corporations BC and EC compete by picking out rates. Suppose that firm BC has chose to produce with tiny sweetness, even though EC has pretty sweet.