CocaCola and PepsiCo are the leading competitors in the market for cola products. In 1999 CocaCola introduced Sprite, which today is among the worldwide leaders in the lemonlime soft drink market and ranks in the top 19 among all soft drinks worldwide. Prior to 1999, PepsiCo did not have a product that competed directly against Sprite and had to decide whether to introduce such a soft drink. By not introducing a lemonlime soft drink, PepsiCo would continue to earn a $299 million prot, and CocaCola would continue to earn a $399 million profit. Suppose that by introducing a new lemonlime soft drink, one of two possible strategies could he pursued: ' PepsiCo could trigger a price war with CocaCola in both the lemonlime and cola markets ' CocaCola could acquiesce and each rm maintains its current 5959 split of the cola market and split the lemonlime market 39;\"79 fPepsiCofCocaCola]. If PepsiCo introduced a lemonlime soft drink and a price war resulted, both companies would earn profits of $199 million. Alternatively, lCocaCola and PepsiCo would earn $2?5 million and $22? million, respectively, if PepsiCo introduced a lemonlime soft drink and CocaCola acquiesced, they could split the markets