Facts: Big Widget Company (BWC) is a company engaged in the manufacturing and sale of widgets to retail hardware stores. After several decades in the market, BWC has a 75 percent market share in the widget industry. BWC was approached by Little Widget Company (LWC), a competitor of BWC with only a 5 percent market share. LWC proposed that the two companies cease undercutting each other on the retail price of widgets. Instead, LWC proposed that each company sell only 100,000 widgets per month at a set price of no lower than $20 per widget. LWC reasoned that the sale of widgets had such a low profit margin that the only way either BWC or LWC could make a profit on the product would be through this plan. An executive at BWC agreed to consider the plan.
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Assume that BWC has rejected LWCs proposal, but instead proposes that they agree that BWC will sell its products only to customers in the states of California, Oregon, and Washington, and that LWC will sell only in Arizona, New Mexico, and Texas.
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