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6. Two rms with differentiated products are competing in price. Firm A and B face the following demand curves: Q A = 90 2PA +
6. Two rms with differentiated products are competing in price. Firm A and B face the following demand curves: Q A = 90 2PA + P3 and Q B = 140 2P3 + PA respectively. Assume production is costless. a. b. Give equations for and graph each rm's reaction curve. If both rms set their prices at the same time, what is the Nash equilibrium price a nd quantity for each rm? What is the prot? Suppose A sets its price rst and then B responds. What price and quantity does ea ch rm set now? Compare the prots from part b and c. Is there a rst mover advantage in price competition
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