Continuing with the advertising model, suppose the firms compete on price rather than quantity. That is, quantity demanded is given by Q = a – p, where p is the price consumers face. After firm 1’s selection of the level of advertising, with the lowest price obtains all the market demand is split equally between them. (To refresh you memory of the price-competition model, review the analysis of Bertrand competition in Chapter 10.) Find the subgame perfect equilibrium of this game and explain why firm 1 advertises at the level that you compute.