13.24. Consider the Coke and Pepsi example discussed in the chapter. a) Explain why each firms reaction

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13.24. Consider the Coke and Pepsi example discussed in the chapter.

a) Explain why each firm’s reaction function slopes upward. That is, why does Coke’s profit-maximizing price go up the higher is Pepsi’s price? Why does Pepsi’s profit-maximizing price go up the higher Coke’s price is?

b) Explain why Pepsi’s profit-maximizing price seems to be relatively insensitive to Coke’s price. That is, why is Pepsi’s reaction function so flat?

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Microeconomics

ISBN: 9780470563588

4th Edition

Authors: David Besanko, Ronald Braeutigam

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Question Posted: Oct 15, 2024 05:03 AM

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13.24. Consider the Coke and Pepsi example discussed in the chapter. a) Explain why each firms reaction

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Microeconomics

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