There are two firms (a,b) and two consumers (1,2). Consumer 1 is more attached to firm a and consumer 2 is more attached to firm b. The maximum price that any consumer is willing to pay is $12. However, if the price difference is greater than $d, they will buy from the lowest price firm. In each game, firms submit simultaneously the prices. This means that as a firm you do not know what price your competitor will charge. If you are too ambitious, you may price too high and lose all the market. If you price very low, it is likely that both consumers will buy from you, but you may not get much from each. You must submit one price for each of the following cases:
1. d=1
2. d=2
3. d=3
Use your inputed strategy pairwise against each of the strategies submitted by others in the class. Your score will be the total profits made.
Input your price (between 0 and 12) for each of the following cases:
Price for d=1 , p=
Price for d=2, p=
price for d=3, p=