Question: Can someone please help me answer this questions asap please? Thank you in advance Assume that two firms compete in an industry, both with constant
Can someone please help me answer this questions asap please? Thank you in advance

Assume that two firms compete in an industry, both with constant marginal cost and average cost of $10. Assume the market inverse demand curve is P = 250 - Q where the market output Q is the sum of all firms' individual outputs, i.e., Q = q1 + q2. Assume that two firms compete in quantities and will interact indefinitely in the market. Suppose that the CEOs of firms 1 and 2 meet one year at the Swan Ball and have an opportunity to chat about the competitive conditions in their industry. They decide that they should not behave so aggressively toward one another; instead, they agree that each of them should produce one-half of the monopoly output. The next morning, each CEO gets up and contemplates whether he or she should fulfill the agreement. Let r be the interest rate. For what values of r is the agreement self-sustaining through the use of trigger strategies? Round your answer up to two decimal places. The agreement is self-sustaining for r choose your answer.. V type your answer... (round up to two decimal places.) choose your
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
