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it is very urgent...please solve as soon as possible Consider two rms with differentiated products, whose demand functions are given by: q1 = a 2p1

it is very urgent...please solve as soon as possible

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Consider two rms with differentiated products, whose demand functions are given by: q1 = a 2p1 +132, and q2 = 2 2p2 +191, where q, and p, are their quantities and prices. Their constant marginal costs are given by: Ci = 1 and (:2 = 1. Assume that rm 1's intercept, a, is known only to rm 1. Firm 2 knows that a can be either 1.5, or 2.5, with equal probabilities. The rms compete in prices in a simultaneous move game. (i) Find the equilibrium prices, (ii) explain what happens if private information can be revealed costlessly

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