Two Toronto breweries, Goodfield and Rightspeed, are competing by setting their beer price, pGand pRrespectively. The marginal cost of marking a beer is zero, and there is no fixed cost. The demand for Goodfield beer is given by qG= 16 - 2pG+ pR, and the demand for Rightspeed beer is given by qR= 16 - pR+ 2pG.

1. What is the main difference between this setting and the classic Bertrand model?
2. Assume the firms choose prices simultaneously. Solve for the Nash equilibrium of this game. How much profits does each brewery make in equilibrium?
3. Suppose that Goodfield could pay an ex-employee working at Rightspeed to know pRbefore choosing pG. (When setting pR, Rightspeed's manager would know her employee gives that information to Goodfield.) Is Goodfield willing to bribe the Rightspeed employee, and if so, how much?