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2 Sophia and Reza are competing orange juice salespersons in Chicago. Their stands are next to each other on a street and consumers regard them
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Sophia and Reza are competing orange juice salespersons in Chicago. Their stands are next to each other on a street and consumers regard them as identical. The marginal cost of an orange juice is $1. The demand for orange juice every hour is Q = 20 P where P is the lowest price between the two salespersons. If their prices are equal they split demand equally. If they set prices simultaneously (prices can be any real number), what is the Nash equilibrium price? If, against what we have assumed in class, orange juice salespersons have to charge prices in whole dollars ($1, $2, $3, etc), what are the Nash equilibrium prices? Assuming whole dollar pricing, if Sophia sets her price before Reza, what price would she chargeStep by Step Solution
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