Suppose that Coca Cola and Pepsi companies compete in quantity sold in a small town. The market demand function for soda in the small town is given by the demand function: Q = 10,000 - P where Q is the aggregate quantity demanded and P is the price of a can of soda. Let Qp be the number of cans of soda sold by the Pepsi company and Qc be the number sold by the Coca Cola company. Assuming that the marginal cost of producing a can of soda is the same for both companies and equal to 50 cents, find the Nash equilibrium of the soda market in this small town. Required:
Illusrate the Nash equilibrium by using the best repsonse functions of both companies.