Find the best response function for each firm

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Firm 1 and 2 produce differentiated products. If firm 1 sets price at p1 and firm 2 sets its price at p2, then firm 1 sells Q1(p1,p2) units of output and firm 2 sells Q2(p1,p2) units, where
Q1(p1,p2) = 6 - 2p1 + p2
Q2(p1,p2) = 6 + p1 - 2p2

Firms 1 and 2 have no cost of production. The above description is completely known to both players

a. Find the best response function for each firm.

b. Find the Bertrand equilibrium.

Reference no: EM13235241

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