Question
Sprint and T-Mobile compete against each other offering wireless service to US customers. The monthly demand curves (with quantities in millions) are Qs = 37.63
Sprint and T-Mobile compete against each other offering wireless service to US customers. The monthly demand curves (with quantities in millions) are
Qs = 37.63 - 0.479Ps + 0.158Pt
Qt = 41.81 - 0.498Pt + 0.191Ps
Suppose the two firms merge to form a single firm known as T-Sprint. Suppose T-Sprint continues to offer separate plans and charge separate prices for former Sprint customers and former T-Mobile customers. Assuming T-Sprint wants to maximize its profits, how should it adjust its former-Sprint-customer price (Ps) and its former-T-Mobile-customer price (Pt). How many former-Sprint and former-T-Mobile customers will it have, and what will the combined firm's monthly profit (not including fixed cost) be?
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