- #1
samchan5167
- 6
- 1
Homework Statement
Two retailers compete on price in a market. Firm 1’s demand depends on both its own price and firm 2’s price as follows: q1 = b – p1 + ap2. Similarly, firm 2’s demand depends on its own price and firm 1’s price: q2 = b – p2 + ap1. Their marginal costs of producing one unit of product are both c.
a. Find the expression of firm 1’s equilibrium price (as a function of a, b and c).
b. Find the expression of firm 1’s equilibrium profit (as a function of a, b and c).
Homework Equations
The Attempt at a Solution
I can't seem to figure this out as normally the price function would be given...
Last edited by a moderator: