Question
(1} Will either rm i ever set its price p (1) Will either firm i ever set its price pt < c ? Why? (2)
(1} Will either rm i ever set its price p
(1) Will either firm i ever set its price pt < c ? Why? (2) Suppose that firm 2 sets price P2. At what price can firm 1 capture the entire market (i.e., given at what P1 will all the customers will buy from firm 1)? Let's consider if Firm 1 can do better by setting a price higher than the solution to question (2). downside of firm I's setting a higher price is that it will lose some of the market. The upside is that it will charge more to any customer it keeps. The next question gets you to work out just how many customers buy from firm 1 when the prices are 'close'. The
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