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Q.9 Amul and Cadbury each produce chocolates at zero cost. Amul and Cadbury sell chocolates to D-shop which in turn sets the price of each

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Q.9 Amul and Cadbury each produce chocolates at zero cost. Amul and Cadbury sell chocolates to D-shop which in turn sets the price of each type of chocolates for sale at its shop in the campus. D-Shop is the only seller of the chocolates in the campus. The chocolates are substitutes for each other. Demand for each type of chocolate is as follows: DA = 100 - PA + 0.5pc and Dc = 100 - pc + 0.5pA. Here DA and Do denotes demand for Amul and Cadbury chocolates at D-Shop respectively, where PA and pc are Amul's unit price and Cadbury's unit price set at the D-Shop. Amul and Cadbury moves first and simultaneously (without collusion) sets a wholesale price to D-Shop. Let we be the per unit wholesale price set by Cadbury and WA be per unit wholesale price set by Amul. D-Shop moves second and chooses the price at the shops, Pc and PA . Each of Amul, Cadbury and D-Shop is interested in maximizing their own profit only. The price charged by Amul in equilibrium is

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