Barnes and Nobel and Amazon are the two largest online book retailers in the U.S.. The two companies compete in the online market for ‘Harry Potter and the Sorcerer’s Stone’, a famous book by the English author J. K. Rawling. Both companies can buy copies of the book from Scholastic at $8 per copy and have an additional average cost $1 per copy. Use game theoretical concepts to explain why, even if the two companies have significant market power, on most days they both sell the book at $9 per copy.

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