Since each retailer has a monopoly power through the captive consumers, the strategies employed in the oligopolistic equilibrium depend on the pricing behavior of a hyphotetical monopolist facing the captive consumers. Before proceeding to solving the oligopoly model we will illustrate the optimal behavior of the consumers facing any price pair and, subsequently, prot-maximizing strategy of the monopolist. This section will demonstrate that the pricing by the monopolist is fundamentally di erent depending on whether the two goods are substitutes or complements so we shall solve the oligopoly model for these two cases separately
