Price-Setting Games with Differentiated Products Consider two firms who produce differentiated products. In this context, a firm may charge a higher price than its rival and still sell to some consumers, because some consumers think it's product is better than the rival's product. Firm 1 has constant marginal cost me, (91) = 5 for all q, > 0, and firm 2 has constant marginal cost me2(92) = 4 for all q1 > 0. When the two firms choose prices p, and pa respectively, the market demands for firm I's product is Q1(P1, P2) = 64-4p1 + 2p2 if p1