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Consider an industry in which two firms, 1 and 2, produce differentiated goods at zero cost. Demand for good i is given by qi =

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Consider an industry in which two firms, 1 and 2, produce differentiated goods at zero cost. Demand for good i is given by qi = xi pi + 0.513;, i,j = 1,2,i at j. The parameter x; is a random variable that with probability 0.5 takes a value equal to 10, and with probability 0.5 takes a value equal to 5. x1 and x2 are independent variables. Firms simultaneous choose prices p1, p; in order to maximize expected prots. When firm i chooses pi already knows the realization of xi but ignores the realization of x}. Compute the symmetric Bayesian-Nash equilibrium of this game

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