Consider a market with two rms, A and B, producing two varieties of the same product with dierent qualities. In particular, the variety produced by rm A has quality VA = 2, while the variety produced by rm B has quality VB = 10. Firm A costs are T CA(qA) = 1/2qA, while rm B costs are T CB (qB ) = 2qB . Consumers value quality dierently, with each individual i valuing quality bi, a number between 0 and 1. Consumers are distributed uniformly between [0, 1]. (As considered in class: that is, for any two values b1 and b2 > b1 in [0, 1] the number (or mass) of individuals with bi [b1, b2] is equal to b2 b1