Question: 1.By using the following basic assumptions on Dynamic Bertrand model of vertical separation, find NE, output of each firms, profit of each firms (in collusion

1.By using the following basic assumptions on Dynamic Bertrand model of vertical separation,

find NE, output of each firms, profit of each firms (in collusion and deviation), and choose

the strategy of one (to collude or deviate) to find CS, and SW.

(One retailer is four times popular than the other in the consumer market.)

Assumptions:

1. model: Dynamic Bertrand with vertical separation

2. Demand curve: P= 180-2Q

3. MC=20

4. Q= q1+q2

5. interest rate r=50%

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