Suppose that there are two firms in the market facing the market demand curve Q =...
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Suppose that there are two firms in the market facing the market demand curve Q = 150 - P and with no costs of production. They produce identical products. 1 a) Suppose the two firms need to choose quantities 91 and 92 simultaneously as in the Cournot model. Compute the outputs in the Nash Equilibrium. Also compute market output, price, and firm profits. b)Suppose the two firms choose prices simultaneously as in the Bertrand model. Compute the prices in the Nash equilibrium. Also compute firm outputs and profits as well as market output. Comment on how your answers will be changed if the two firms either 1) have capacity constraints or 2) produce differentiated products. Explain. c) Suppose the two firms need to choose quantities q 1 and q 2. Compute the equilibrium of the Stackelberg version of the game in which firm 1 chooses q first and then firm 2 chooses q 2. Also compute market output, price, and firm profits. Suppose that there are two firms in the market facing the market demand curve Q = 150 - P and with no costs of production. They produce identical products. 1 a) Suppose the two firms need to choose quantities 91 and 92 simultaneously as in the Cournot model. Compute the outputs in the Nash Equilibrium. Also compute market output, price, and firm profits. b)Suppose the two firms choose prices simultaneously as in the Bertrand model. Compute the prices in the Nash equilibrium. Also compute firm outputs and profits as well as market output. Comment on how your answers will be changed if the two firms either 1) have capacity constraints or 2) produce differentiated products. Explain. c) Suppose the two firms need to choose quantities q 1 and q 2. Compute the equilibrium of the Stackelberg version of the game in which firm 1 chooses q first and then firm 2 chooses q 2. Also compute market output, price, and firm profits.
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Let the demand function be Q 150P P 150 Q is the inverse demand function Cost of production is zero ... View the full answer
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
Posted Date:
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