Assume a circular city model t is the transportation cost parameter why only when t=0 does it conform to the Bertrand paradox

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The Bertrand paradox is a situation where two firms compete in a market by setting prices. In a circular city model, the market is represented by a circle, and the firms are located at different points on the circle. The transportation cost parameter, t, represents the cost of transporting goods from one point on the circle to another.

When t=0, the transportation cost is zero, which means that the firms can easily transport their goods to any point on the circle without incurring any costs. In this case, the firms will set their prices at the marginal cost, which is equal to zero. This results in a perfectly competitive market, where both firms will charge the same price and share the market equally.

However, when t>0, the transportation cost becomes a factor that affects the pricing decisions of the firms. The firms will have to take into account the cost of transporting their goods to different points on the circle, and this will affect their pricing decisions. As a result, the market will no longer be perfectly competitive, and the Bertrand paradox will not apply.

In summary, the Bertrand paradox only applies to the circular city model when t=0 because this is the only scenario where the market is perfectly competitive, and the firms will set their prices at the marginal cost