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There are two restaurants, R1 and R2 in the town of Eten. R1 specialises in Steak and R2 specialses

 
 
Reply Tue 7 Jul, 2020 06:32 am
There are two restaurants, R1 and R2 in the town of Eten. R1 specialises in Steak and R2 specialses in Chickan Wings. For R1 it cots 2 Euros to make a plat of Stek and for R2 it costs 1 euro for Chicken Wings. R1’s price is p1 Euros per plate of Steak and R2’s price is p2 Euros per plate of Chicken Wings, their respective weekly sales of Steak and of chicken wigs are given by the following equations:
Q1=10-p1+p2
Q2=6-2p1+p2
Part A:
Find the reaction functions of both the restaurants and the Nash Equilibrium prices.

Part B:
What would R1’s and R2’s prices be if the two decided to collude to maximize joint profits in this market?
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