BestDeal.com (henceforth, BD) and CrazySavings.com (henceforth, CS) are two online retailers with free return policies. They sell the same brand of TV. The retailers' cost per TV is $1000.

There are 100 buyers in the market. Each buyer has a perfectly inelastic demand for exactly one TV. Initially, each buyer pays for a TV from either website with equal probability. If the buyer finds out that the other website offers a strictly lower price, he/she will simply return the TV to the original website free of charge, and then buy a new one from the other website at the cheaper price.

Is there an equilibrium in which BD charges $1500 for each TV?The highest price CS can charge per TV in any Nash equilibrium is.

The lowest price CS can charge per TV in any Nash equilibrium is.

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Question 9

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Now suppose that the two websites both announced their "lowest price guaranteed" policy. Here is the statement of the policy:

"We offer the best price, guaranteed! If you pay for a TV on our site and later find a lower price from our competitor, just let us know and we'll refund you the difference!"

Is there an equilibrium in which BD charges $1500 for each TV?

Group of answer choices

Yes

No

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Question 10

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Who can benefit from the "lowest price guaranteed" policy?

Group of answer choices

The buyers

The retailers

Both the buyers and the retailers

Neither the buyers nor the retailers