Suppose the demand for Pepsi is qp = 54 - 2pp + 1p.The demand for Coke is qc = 54 - 2pc + 1pp.Each firm faces a constant marginal cost of zero.Determine the Bertrand equilibrium prices.What happens to the Bertrand equilibrium prices and profits if increased differentiation causes the demand for Pepsi to become qp = 104 - 2pp + 1pc while the demand for Coke remains unchanged?
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