E. Bertrand Model with Lowest Price Guarantee/Price Match (5 points) Take the two firms in our...

Transcribed Image Text:

E. Bertrand Model with Lowest Price Guarantee/Price Match (5 points) Take the two firms in our previous Bertrand model as Staples and Bestbuy. They are selling the same HP printer model, with the demand given by P-800-Q. and both share the same marginal cost 200 with no fixed costs. In addition now we assume that both Staples and Bestbuy promise their customers "Lowest Price Guarantee or Price Match." That is, a customer can get the refund for the overcharged price. For example, if Staples charges $250 and Bestbuy charges $260, then a Bestbuy customer is entitled to a 260-250-$10 refund from Bestbuy. With "Lowest Price Guarantee/Price Match" in this market, if now Bestbuy charges p. 450, then what price p, will be Staples' best response? Briefly explain your reason. E. Bertrand Model with Lowest Price Guarantee/Price Match (5 points) Take the two firms in our previous Bertrand model as Staples and Bestbuy. They are selling the same HP printer model, with the demand given by P-800-Q. and both share the same marginal cost 200 with no fixed costs. In addition now we assume that both Staples and Bestbuy promise their customers "Lowest Price Guarantee or Price Match." That is, a customer can get the refund for the overcharged price. For example, if Staples charges $250 and Bestbuy charges $260, then a Bestbuy customer is entitled to a 260-250-$10 refund from Bestbuy. With "Lowest Price Guarantee/Price Match" in this market, if now Bestbuy charges p. 450, then what price p, will be Staples' best response? Briefly explain your reason.

Answer rating: 100% (QA)

Answers and Explanation the Bertrand model with Lowest Price GuaranteePrice Match each firm sets a p... View the full answer