What choice variable realistically is easier to commit to, prices or quantities? What business strategies do firms use to increase their commitment to their list prices? Return to Example 15.4 , in which two firms chose price for differentiated toothpaste brands simultaneously. So that the following calculations do not become too tedious, we make the simplifying assumptions that a 1 = a 2 = 1 and c = 0.

Substituting these parameters back into Example 15.4 shows that equilibrium prices are 2/3 ≈ 0.667 and profits are 4/9 ≈ 0.444 for each firm.