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3. [30 marks] (Vertical differentiation) There are two rms, Firm 1 and Firm 2. Firm ls product has quality H and Firm 2s product has

3. [30 marks] (Vertical differentiation) There are two rms, Firm 1 and Firm 2. Firm l\"s product has quality H and Firm 2\"s product has quality L, with 0

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