Explain the impact of differentiation, the number of players, and collaboration/competition on triggering or avoiding a price war. In groups of 2-4, students price a product (differentiated or commoditized) and analyze the sales outcomes after each of many turns.
The parameters that define consumer buying behavior are the marginal utility and covariance matrix, defined by you. There are 1,000 ”unique” consumers in the market, each with a utility randomly drawn from the covariance matrix. If students overprice their products, the consumers will not buy them.
