Your client is convinced that this new product is truly different from anything else on the market, and she tells you that she doesn’t see any competitors on the horizon for the foreseeable future. based on this information, which of the following should you recommend to your client to capitalize on the situation?
a. use price discounts to stimulate sales.
b. bundle the product with a free wicker basket and a scented candle.
c. use a penetration pricing strategy to establish the product in the market.
d. pursue a price skimming strategy

Suppose that two firms produce differentiated products and compete in prices. as in class, the two firms are located at two ends of a line one mile apart. consumers are evenly distributed along the line. the firms have identical marginal cost, $60. firm b produces a product with value $110 to consumers.firm a (located at 0 on the unit line) produces a higher quality product with value $120 to consumers. the cost of travel are directly related to the distance a consumer travels to purchase a good. if a consumerhas to travel a mile to purchase a good, the incur a cost of $20. if they have to travel x fraction of a mile, they incur a cost of $20x. (a) write down the expressions for how much a consumer at location d would value the products sold by firms a and b, if they set prices p_{a} and p_{b} ? (b) based on your expressions in (a), how much will be demanded from each firm if prices p_{a} and p_{b} are set? (c) what are the nash equilibrium prices?