Session 3: Can New and Better Break in? In this session, a new operating system appears. The new system is better than any of the old systems in the sense that if it had the same number of customers as the old systems, all demanders’ Buyer Values would be 50% higher. The firm with the largest customer base in the last round of Session 2 will also be allowed to sell in Session 3. Customers who stay with the old firm will not have to pay the learning cost. Learning the new system is more costly than learning one of the old systems. Any customer who switches operating systems will have to pay a $20 learning cost as well as the price charged by the seller. Warm-up for Session 3 In the last round of Session 2, Firm A had 48 customers and Firms B and C had dropped out of the market. Firm A remains in the market in Session 3, and Firm D enters the market with a new, technically superior, operating system. Suppose that the relation between Buyer Values and market share is as given in Table 1.3 表格见ppt W 1.7 If in Round 1 of Session 3, Firm D’s new operating system attracts 10 customers away from Firm A (which previously sold 48 units) what will be the Buyer Value of Firm D’s operating system? $ .What will be the Buyer Value of Firm A’s operating system? $ . W 1.8 If in Round 1, Firm D’s new operating system attracts 20 customers away from Firm A, what will be the Buyer Value of Firm D’s operating system? $ .What will be the Buyer Value of Firm A’s operating system? $ . W 1.9 Suppose that buyers believe that in Round 1, Firm D’s new operating system will attract 20 customers away from Firm A, and suppose that Firm A charges $40 for the current upgrade of its operating system. What will buyers expect their profits to be if they stay with Firm A? $ . Given these expectations, what price should Firm D charge if it wants buyers to expect to make $1 more profit in this round by switching to OS D than by staying with OS A? $ .