Two retailers compete on price in a market. Firm l's demand depends on both its own price and firm 2'sprice as follows: al = a - pa + b(p2 - p1). Similarly, firm 2's demand depends on its own price and firm l's price: q2 = a - p2 + b(pl - p2). Their marginal costs of producing one unit of product are both c. 1. Find the expression of firm l's equilibrium price. 2. Find the expression of firm l's equilibrium profit.

  

Two retailers compete on price in a market. Firm l's demand depends on both its own price and firm 2'sprice as follows: al = a - pa + b(p2 - p1). Similarly, firm 2's demand depends on its own price and firm l's price: q2 = a - p2 + b(pl - p2). Their marginal costs of producing one unit of product are both c. 1. Find the expression of firm l's equilibrium price. 2. Find the expression of firm l's equilibrium profit.