Question: Two firms, Aquasense and Navabot are competing in a market for robotic shipping, which is modelled as a Cournot Game. The market demand is estimated

Two firms, Aquasense and Navabot are competing in a market for robotic shipping, which is modelled as a Cournot Game. The market demand is estimated to be:

Qd = 200 – P

These are the only two firms in the market.

Aqua sense has marginals cost of $20 and Navabot has marginal costs of $30 per unit.

a) Set up this game by identifying Players, Strategies, and Payoff Functions.

b) Find the best response functions for the Players.

c) Solve for the Nash equilibrium of the game.

d) Explain why your answer in part (c) must be a Nash equilibrium for the game.

e) What will be the market quantity and market price?

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