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Now consider a situation in which two firms compete in a differentiated Bertrand market, where demand curves are given by: Qa = 100 - 4Pa

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Now consider a situation in which two firms compete in a differentiated Bertrand market, where demand curves are given by: Qa = 100 - 4Pa + 2Ppi QD = 100 - 4Pp + 2Pa And MC for each firm is given by MC = 23. (a) Are goods A and B complements or substitutes? (b) What would be the Nash equilibrium prices the two firms prior to the merger? (c) What would be the prices that would maximize the merged firms profits? (d) Comment on the following statement: "A regulator should be more concerned about a merger between two firms that sell close complements than two firms that sell close substitutes."

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