Let us consider a repeated Bertrand game Define what is a trigger strategy? In...

 

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Let us consider a repeated Bertrand game • Define what is a trigger strategy? • In which cases trigger strategies can help firms to increase their profits ? • Define what is a stable agreement? • Consider an economy with the interest rate at r= 0.25 and no growth rate. The market where firms compete is very volatile and there is a high probability h = 0.2 that the industry collapse. Would the firms accept a collusive agreement to set monopoly price and share equally the market if I = {1,2}? [It is not enough to use the result at slide 16, prove the result by your own using the stream of profits and the present values in this particular case.] • Can you think to other agreement that firms would ассept? • What if I = {1,2, 3}? Show analytically your argument! • Answer to the previous question in the case of a positive growth rate g = 0.1. Let us consider a repeated Bertrand game • Define what is a trigger strategy? • In which cases trigger strategies can help firms to increase their profits ? • Define what is a stable agreement? • Consider an economy with the interest rate at r= 0.25 and no growth rate. The market where firms compete is very volatile and there is a high probability h = 0.2 that the industry collapse. Would the firms accept a collusive agreement to set monopoly price and share equally the market if I = {1,2}? [It is not enough to use the result at slide 16, prove the result by your own using the stream of profits and the present values in this particular case.] • Can you think to other agreement that firms would ассept? • What if I = {1,2, 3}? Show analytically your argument! • Answer to the previous question in the case of a positive growth rate g = 0.1.

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Answer 1 A trigger strategy is any of a class of strategies employed in a repeated noncooperative game A player using a trigger strategy initially cooperates but punishes the opponent if a certain lev... View the full answer