Consider a market with two horizontally differentiated firms, X and Y. Each has a constant marginal cost of $20. Demand functions are: Qx =100−2Px +1Py Qy =100−2Py +1Px   Calculate the Bertrand equilibrium in prices in this market. How will the equilibrium change if cross-price elasticities of demand increase by 20%? How would you alter the equations to show such an increase? Compute the new equilibrium

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