Question

In an initial Nash- Bertrand equilibrium, two firms with differentiated products charge the same equilibrium prices. A consumer testing agency praises the product of one firm, causing its demand curve to shift to the right as new customers start buying the product. (The demand curve of the other product is not substantially affected.) Use a graph to illustrate how this new information affects the Nash- Bertrand equilibrium. What happens to the equilibrium prices of the two firms?



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  • CreatedNovember 13, 2014
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