Bertrand Assignment

It's been a year since Paul and Steph have finished building their facilities. They have unfortunately realized that they have built WAY too much capacity - they are always well less than half full. Paul and Steph start offering coupons and discounts to students to entice them to go to their action park instead of the other one (the students see them as essentially the same offering and go to the one with the cheaper price).

1. What price will Steph ultimately decide to offer and what price will Paul decide to offer? (Be sure to explain how you got these answers.)

2. This outcome isn't that good for either of them. (Especially Peter!) What are two (legal) things they could do to improve their financial performance with their action parks? (Be sure to explain why they would help!)