Find the nsh equilibrium, After a few years of monopoly,

Find the nsh equilibrium

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Reference no: EM13795929

After a few years of monopoly, the family that owns the coca-cola monopoly gets in a flight, and they split the company in two. Now there are two large coca-cola retailers in your area, and each retailer must decide whether to charge a high or low price. Assume all customers purchase from the firm with the lowest price. If both firms charge the same price, they split the market. The high price is the monopoly price, so at the high price, the full market is worth the same amount as is it is for monopoly (i.e. your answer to question 2d). At the low price, the market is worth 60% of the value of the monopoly market.

a. Set up the game as a simultaneous move game.

b. find the Nsh equilibrium.

Reference no: EM13795929

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