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(a) Consider an industry served by two firms, say firm 1 and firm 2, that sell identical goods. The firms set prices ?1 and ?2

(a) Consider an industry served by two firms, say firm 1 and firm 2, that sell identical goods. The firms set prices ?1 and ?2 simultaneously to maximise profits and each firms has constant marginal costs of production. Suppose that marginal costs are ?1 = ?2 = ?, 0 ? ?

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