Prices are too High!

• Two firms selling complements a & b

• Demand is Q = 100 - (Pa + Pb)

• Pa and Pb chosen independently

  • Pa = Pb = 33 1/3; Q = 33 1/3; Profits = $2,222

• Pa and Pb coordinated

  • Pa = Pb = 25; Q = 50; Profits = $2,500

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