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Two producers sell similar products, except that seller A has more pricing power than seller B. This means that for a given increase of own
Two producers sell similar products, except that seller A has more pricing power than seller B. This means that for a given increase of own price, A would lose fewer customers to B and overall, than would B lose to A and overall. Specifically, suppose that the demand for their products so depends on their prices: QA = 12-PA +3PB B = 12-2PB + 2PA Each producer has a marginal cost of zero and seeks to maximize revenue OP. Compute the A's best response price P, as a function of B's price. Compute the B's best response price PR as a function of B's price. Compute the Nash equilibrium prices
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