Two natural boundaries to rival reaction are for the rival to not react (or not follow) a firm's actions or to follow a firm's actions. Consider pricing in a differentiated product market. If all firms in the oligopolistic market follow each other's price changes, then the size of the market may change, but the market share controlled by each firms would not appreciably change. On the other hand, if other firms do not follow a price change, then the market share controlled by the firm that has changed its price will change. Suppose we denote market demand by "I) market,"; demand given price matching behavior by "d follower"; and demand given price changes are not matched by "d nonfollower," similar to figure 9.2. Two panels are shown with these three demand curves.

Each panel has the same market and follower demand. Based on these panels, answer the following questions.
a. What market share does the firm depicted have along the follower demand curve?
b. What is this firm's current price?
c. Which panel depicts a market in which niche players have a stronger brand identity and arc able to maintain at least some of their market despite other firms dropping their price? Answer this problem by making specific reference to what happens in the face of price decreases in each panel.

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Panel A Panel B $10 $10 58 D market D market d nonfollower $2 nonfollower d follower d follower 10 Q 10 o