- Consider an asymmetric Cournot duopoly game, where the two firms have different costs of production....

Transcribed Image Text:

- Consider an asymmetric Cournot duopoly game, where the two firms have different costs of production. Firm 1 selects quantity 91 at a pro- duction cost of 2q. Firm 2 selects quantity 92 and pays the produc- tion cost 4q2. The market price is given by p = 12 91-92. Thus, the payoff functions are u(91, 92) = (12 are u(91, 92) = (12 - 91-92)91-291 and u2(91, 92) = (12-91-92)92 - 492. Calculate the firms' best-response functions BR(92) and BR2(91), and find the Nash equilibrium of this game. - Consider an asymmetric Cournot duopoly game, where the two firms have different costs of production. Firm 1 selects quantity 91 at a pro- duction cost of 2q. Firm 2 selects quantity 92 and pays the produc- tion cost 4q2. The market price is given by p = 12 91-92. Thus, the payoff functions are u(91, 92) = (12 are u(91, 92) = (12 - 91-92)91-291 and u2(91, 92) = (12-91-92)92 - 492. Calculate the firms' best-response functions BR(92) and BR2(91), and find the Nash equilibrium of this game.

Answer rating: 100% (QA)

To find the bestresponse functions and Nash equilibrium in this asymmetric Cournot duopoly game we n... View the full answer