Question: = Firms A and B compete in prices (Bertrand competition). The marginal cost for each firm is MC = 40. The market demand is

= Firms A and B compete in prices (Bertrand competition). The marginal cost for each firm is MC = 40. The

= Firms A and B compete in prices (Bertrand competition). The marginal cost for each firm is MC = 40. The market demand is given by q 200-Pmin, where Pmin is the lowest of the prices set by the firms. The demand is satisfied by the firm that sets the lowest price. If both firms set the same price, they split the market evenly. What is the profit of firm A in the Nash equilibrium of this game?

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In Bertrand competition firms set prices rather than quantities To find the Nash equilibrium and the profit of firm A we need to consider the pricing ... View full answer

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