The vast majority of onli

The vast majority of onli

The vast majority of online book sales are made by either Amazon or Barnes and Noble. It is estimated that the own price elasticity for Amazon is -0.45 and for Barnes and Noble is -3.5. The cross price elasticity for Amazon with respect to the Barnes and Noble price is 0.2, while for Barnes and Noble it is 3.5 with respect to the Amazon price. (: Judith Chevalier and Austan Goolsbee, 2003, ?Measuring Prices and Price Competition Online: Amazon vs. Barnes and Noble,?2.)a.Construct the following simultaneous pricing game in strategic form. Each online retailer is considering a 2% increase in price. Estimate the revenue impacts for each retailer (as a percent change) and place these revenue changes in a normal form payoff matrix below. Please show all supporting calculations.B.

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