Suppose two retailers, say A (Amazon) and B (Best Buy), are…

Suppose two retailers, say A (Amazon) and B (Best Buy), are involved in price competition for laptops that they sell, as given in the following figure. If A and B both sell at $300, both earn a profit of $10k. If B sells at $200 and A sells at $300, then B earns $13k and A only $4k, and vice versa. Finally, if both charge $200, they both earn $8k. What would be the Nash equilibrium in the situation and why? How can the firms limit price competition and generate a higher profit of $10k each at the $300 price point? Discuss how the strategy would limit competition.  Nash.jpg