Question
Thunja's Pizza and Kanjeti's Wings and Dip are competing pizza shops in Kolkata, Indiana. Their shops are next to each other on a street and
Thunja's Pizza and Kanjeti's Wings and Dip are competing pizza shops in Kolkata, Indiana. Their shops are next to each other on a street and consumers regard them as identical. The marginal cost of a pizza is $1. The demand for pizza every hour is Q = 20 P where P is the lowest price between the two salespersons. If their prices are equal they split demand equally. a. If they set prices simultaneously (prices can be any real number), what is the Nash equilibrium price? b. If pizza salespersons have to charge prices in whole dollars ($1, $2, $3, etc), what are the Nash equilibrium prices? c. Assuming whole dollar pricing, if Thunja sets his price before Kanjeti, what price would he charge?
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