Consider a modified Cournot game with a linear inverse demand: {' P (91 +92) - (91...

 

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Consider a modified Cournot game with a linear inverse demand: {' P (91 +92) - (91 +92) if 1- (91 +92) ≥ 0 if 1-(91 +92) <0 0 Firm 1's production cost is zero, and firm 2 has two possible types L and H with Pr (H) = 1/2. Firm 2 can have zero marginal cost when it has type H and a higher marginal cost 1/4 when it has type L. (a) Find its set of ex ante Bayesian Nash equilibria. (b) Find its set of interim Bayesian Nash equilibria. Consider a modified Cournot game with a linear inverse demand: {' P (91 +92) - (91 +92) if 1- (91 +92) ≥ 0 if 1-(91 +92) <0 0 Firm 1's production cost is zero, and firm 2 has two possible types L and H with Pr (H) = 1/2. Firm 2 can have zero marginal cost when it has type H and a higher marginal cost 1/4 when it has type L. (a) Find its set of ex ante Bayesian Nash equilibria. (b) Find its set of interim Bayesian Nash equilibria.

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To find the ex ante Bayesian Nash Equilibrium BNE in this modified Cournot game we need to consider the players strategies and beliefs before any information about the types is revealed In this case F... View the full answer