Background: Travel-Rx plans to spend $6 million to transform 6 recreational vehicles (rv’s) into health labs. The rv’s will tour the Texas offering a $99 heart-health workup to anybody who wants one. The workup consists of a detailed questionnaire and some basic diagnostics (blood pressure, ultrasound, cholesterol test, etc). Using the information from the questionnaire and the diagnostics, a statistical analysis will determine the customer’s risk of a heart “malfunction” in the next year, the next three years, and the next five years. Similar question-based analyses are free online; expensive diagnostic-based analyses are available from doctors; Travel-Rx merges the two. None of the statistical analyses can outperform a coin-flip.

1. Should Travel-Rx expect their competition to behave like Cournot or Bertrand? Explain the logic.