Solve for nash equilibrium and find equilibrium wholesale

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Reference no: EM131163599

ABC Inc is a monopolist selling to two competitive retailers who engage in the Bertrand competition. ABC Inc has a constant marginal cost of 10. Demand at the retail market is given by p=70-q.

A. Solve for the Nash equilibrium, and find the equilibrium wholesale and retail price: w and p.

B. Find the equilibrium profits for ABC, and the two retailers. Find the consumer surplus. Now ABC finds that if retailers make sales effort to provide customer services, demand can be increased to p=110-q. The required services cost each retailer 100.

C. Will the customer service be provided in the equilibrium? Explain your reason.

Reference no: EM131163599

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