There are two firms, A and B, at the market. They sell identical products and compete in prices. The price firm A offers is pa = 100. Firm B gives a 'price guarantee': "If you find a lower price, we will pay 110 % of the price difference back to you". What is the price set by Firm B if it wants to beat the price of Firm A by 1%? Corment the situation from the point of view of the consumer. %3D

There are two firms, A and B, at the market. They sell identical products and compete in prices. The price firm A offers is pa = 100. Firm B gives a 'price guarantee': "If you find a lower price, we will pay 110 % of the price difference back to you". What is the price set by Firm B if it wants to beat the price of Firm A by 1%? Corment the situation from the point of view of the consumer. %3D

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter16: Bargaining

Section: Chapter Questions

Problem 16.1IP

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