Answered>Order 4645
Consider a Bertrand price competition market with differentiated products. Suppose demand for good 1 is Q1=a?bP1+dP2 and demand for good 2 is Q2=a?bP2+dP1. Firm 1 has costs of C1(Q1)=1/2 C1Q1^2 and Firm 2 has costs of C2(Q2)=1/2C2Q2^2 a.Do these demands suggest that Firm 1’s and Firm 2’s products are substitutes from consumers’ perspectives? Explain. b.Assuming […]