Q3. Suppose the following dynamic game C 11,0 13.01 a. How many subgames in this game?...

 

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Q3. Suppose the following dynamic game C 11,0 13.01 a. How many subgames in this game? b. Find all pure subgame perfect Nash equilibria. Player 1 TH Q4. Consider a Cournot competition model with two firms, 1 and 2. They produce identical goods in the same market with demand function P= 120-5Q, with Q=q₁+q. Furthermore, their production process generates pollution to the environment, which increases their cost of production. Their cost functions are given by Ci(91-92) = 10 q₁²+592 C₂(91-92) = 109₂ +59₁ (a) Calculate their equilibrium quantities and prices for both firms. (b) Consider they collude and form a cartel, that is they perform together as a monopoly and maximize their total profits. Calculate new equilibrium quantities and prices. Q3. Suppose the following dynamic game C 11,0 13.01 a. How many subgames in this game? b. Find all pure subgame perfect Nash equilibria. Player 1 TH Q4. Consider a Cournot competition model with two firms, 1 and 2. They produce identical goods in the same market with demand function P= 120-5Q, with Q=q₁+q. Furthermore, their production process generates pollution to the environment, which increases their cost of production. Their cost functions are given by Ci(91-92) = 10 q₁²+592 C₂(91-92) = 109₂ +59₁ (a) Calculate their equilibrium quantities and prices for both firms. (b) Consider they collude and form a cartel, that is they perform together as a monopoly and maximize their total profits. Calculate new equilibrium quantities and prices.