Three firms compete as Bertrand price competitors in a differentiated products market. Each of the three firms has a marginal cost of 0. The demand curves of each firm are as follows:

where P23 is the average of the prices charged by Firms 2 and 3, P13 is the average of the prices charged by Firms 1 and 3, and P12 is the average of the prices charged by Firms 1 and 2 [e.g., P12 = 0.5(P1 + P2)]. What is the Bertrand equilibrium price charged by each firm?

Transcribed Image Text:

02 02P+ P