Consider a duopoly for a homogeneous product. Firms i = 1, 2 set price-quantity pairs (p i

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Consider a duopoly for a homogeneous product. Firms i = 1, 2 set price-quantity pairs (pi, qi) simultaneously. If at these pairs some consumers are rationed, rationing is assumed to be efficient. Suppose firms are constrained by capacities ki > 0 and inverse market demand is P (q) = q-1. Does a Nash equilibrium in pure strategies exist? Is it unique? Characterize all Nash equilibria of this game.

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