PC Connection and CDW are two online retailers that compete in
an Internet market for digital cameras. While the products they
sell are similar, the firms attempt to differentiate themselves
through their service policies. Over the last couple of months, PC
Connection has matched CDW’s price cuts, but has not matched its
price increases. Suppose that when PC Connection matches CDW’s
price changes, the inverse demand curve for CDW’s cameras is given
by P = 1,200 - 2Q. When it...