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QUESTION
Coke and Pepsi each choose one of two prices: "Low" (P = $2) or "High" (P = $3). There are 50 buyers who will pick the lowest price option.
- Coke and Pepsi each choose one of two prices: "Low" (P = $2) or "High" (P = $3). There are 50 buyers who will pick the lowest price option. However, if the prices are the same, 25 will buy from Coke and 25 from Pepsi. For simplicity, assume there are no costs, so profit is just price times quantity.
- Draw the 2x2 payoff matrix and find Nash equilibrium.
