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Suppose that identical duopoly firms have constant marginal costs of $10 per unit. Firm 1 faces a demand function of q1 = 100 - 2p1
Suppose that identical duopoly firms have constant marginal costs of $10 per unit. Firm 1 faces a demand function of q1 = 100 - 2p1 + p2, where q1is Firm 1's output, p1 is Firm 1's price, and p2 is Firm 2's price. Similarly, the demand function Firm 2 faces is q2 = 100 - 2p2 + p1. Solve for the Bertrand equilibrium.
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