Two firms are competing on price. If they have the same price, they share the market - otherwise the one with the lowest price captures all demand Market demand follows
Q(P)=100−3P
Cost is
C(Q)=10Q
Firms can only choose between the following prices:
9,10,11,12
. In the Nash equilibrium of this game, what price does each firm charge? Suggestion: calculate the profits they obtain for each of the price combinations, write down the game in its normal form (payoff matrix), and then use the underlining method to match best responses.