Sure! Here is the transcription of the text from the image intended for an educational website:---**1.7.** In Section 1.2.B, we analyzed the Bertrand duopoly model with differentiated products. The case of homogeneous products---Note: There are no graphs or diagrams present in this image. **Transcription for Educational Website:**The text explores a conclusion about consumer demand in a competitive market. Consider the scenario where the demand for a product from firm $ i $ is determined as follows:- $ a - p_i $ when $ p_i < p_j $- 0 when $ p_i > p_j $- $ (a - p_i)/2 $ when $ p_i = p_j $Additionally, assume there are no fixed costs, and the marginal costs are constant at $ c $, where $ c < a $. Under these conditions, if both firms simultaneously decide on prices, the singular Nash equilibrium occurs when both firms set their prices at $ c $.This theoretical framework provides insight into pricing strategies in competitive markets where firms have similar cost structures and are competing for the same consumer base.

The profit for Firm i =a-pipi-c if pi<pj= 0 if…

Answered: Nash equilibrium is that both firms…

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Economics

Nash equilibrium is that both firms charge the price c.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Sure! Here is the transcription of the text from the image intended for an educational website:

---

**1.7.** In Section 1.2.B, we analyzed the Bertrand duopoly model with differentiated products. The case of homogeneous products

---

Note: There are no graphs or diagrams present in this image.

**Transcription for Educational Website:**

The text explores a conclusion about consumer demand in a competitive market. Consider the scenario where the demand for a product from firm $ i $ is determined as follows:

- $ a - p_i $ when $ p_i < p_j $
- 0 when $ p_i > p_j $
- $ (a - p_i)/2 $ when $ p_i = p_j $

Additionally, assume there are no fixed costs, and the marginal costs are constant at $ c $, where $ c < a $. Under these conditions, if both firms simultaneously decide on prices, the singular Nash equilibrium occurs when both firms set their prices at $ c $.

This theoretical framework provides insight into pricing strategies in competitive markets where firms have similar cost structures and are competing for the same consumer base.

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