Assume that two firms sell differentiated products and face the following demand curves: q1 = 15 − p1 + 0.5 p2 and q2= 15 − p2 + 0.5p1 (assume marginal cost is zero)
1. Derive the best response function for each firm. Do these indicate that prices are strategic substitutes or strategic complements?
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Write My Essay For Me2. What is the equilibrium set of prices in this market? What profits are earned at those prices?
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