Two restuarants inBruges, BelgiumOud Brugge and Den Dijverengage in price competition. Oud Brugge is located on the central townsquare, which is the main tourist area. DenDijver, located on a small sidestreet, is recognized among beer lovers as being one ofBelgium's top beer restaurants. Two types of diners patronize theserestaurants: beerlovers, who arewell-informed about bothrestaurants, andtourists, who know about Oud Brugge and may or may not know about Den Dijver. Suppose there are 100 beer lovers and 100 tourists. Beer lovers will not eat at OudBrugge, and their demand function for meals at Den Dijver is

QBDD>100(10.02pDD).

Thetourists' demand function for Oud Brugge is

QTOB>n(0.3333333330.04pOB+0.02pDD)+(100n)(10.02pDD),

where n is the number of tourists who know about both restaurants. Thetourists' demand function for Den Dijver is

QTDD=n(0.6666666670.02pDD+0.01pOB).

The marginal cost of a meal at Den Dijver is 5 and the marginal cost of a meal at Oud Brugge is 15. Oud Brugge and Den Dijver simultaneously set prices.

What is the Nash equilibrium

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in prices as a function ofn?

The Nash equilibrium is

pDD=

nothing

and pOB=

nothing

. (Round all numbers to exactly three decimalplaces.) (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts.E.g., a superscript can be created with the^ character.)

If n=0, what is the Nash equilibrium inprices?

The Nash equilibrium is for Den Dijver to charge $

nothing

and for Oud Brugge to charge $

nothing

.

If n=100, what is the Nashequilibrium?

The Nash equilibrium is for Den Dijver to charge $

nothing

and Oud Brugge to charge $

nothing

.