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Little Italy has 100 consumers all of whom buy either one pizza or nothing. Each consumer has a reservation price of $15. That is, each
Little Italy has 100 consumers all of whom buy either one pizza or nothing. Each consumer has a reservation price of $15. That is, each consumer is willing to pay at most $15 for a pizza. There are two pizza stores - A and B - located next to each other. It costs $7 to make a pizza. Let pa and pb denote the price charged by stores A and B respectively. For simplicity, assume P: 6 {12, 15} for both i = A, B. Hereafter we ignore the dollar sign. Thus, prices can take just one of the two values - 12 or 15. If p,-
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