You know what your competitorquot;s cost function is, and it knows yours. Your products, although different to experts, are indistinguishable to the…
You know what your competitor”s cost function is, and it knows yours. Your products, although different to experts, are indistinguishable to the average consumer. Your marketing research team has provided you with the following market demand curve: Q = 1,250 – .5P . Your cost function is C A (Q A ) = 8Q A . Your competitor”s cost function is C B (Q B ) = 6Q B . Your diligent effort will allow you to decide how much of your product to provide and allow you to place it on the market shortly before your competitor will be able to make its product available for sale. What output level will you choose, and what price will you charge?
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