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Problem 4. Bertrand Competition with Different Costs Suppose two firms facing a demand D(p) compete by...
Problem 4. Bertrand Competition with Different Costs Suppose two firms facing a demand D(p) compete by setting prices s...
Problem 4. Bertrand Competition with Different Costs Suppose two firms facing a demand D(p) compete by setting prices simultaneously (Bertrand Competition). Firm 1 has a constant marginal cost ci and Firm 2 has a marginal cost c2. Assume ci < C2, i.e., Firm 1 is more efficient. Show that (unlike the case with identical costs) p1 = (1 and p2 = c2 is not a Bertrand equilibrium.
Problems 3,4 and 5 Problem 3. Consider the game below. (a) There are no dominant or...
Problems 3,4 and 5
Problem 3. Consider the game below. (a) There are no dominant or dominated strategies. Is there anything you can say about what players will do? Player 2 C T (2,1) (0,2) M (1,1) (1,1)| (1,0) B(0,1) (2,0) (2,2) (0,3) Player (b) Report the best responses Problem 4. Bertrand Competition With Different Costs Suppose two firms facing a demand Dip) compete by setting prices simultaneously (Bertrand Competition). Firm 1 has a constant marginal cost e and Firm...
Consider the following variation of the Bertrand competition model (e.g., price competition) discussed in class. Two...
Consider the following variation of the Bertrand competition model (e.g., price competition) discussed in class. Two firms, 1 and 2, are producing the same identical product. Firms compete in prices: Firm 1 choses pı, and Firm 2 choses p2. Given pı and p2, the individual demands of fhrms are: 10-pi pi 〈 p2 Pi P2 0 P1〈P2 Both firms have constant marginal costs of c. To sum up, the payoffs are as follows: 2 C 92 (P1, P2 Unlike the...
Can someone help me with this problem? Thank you for everything! QUESTION 11 Consider an industry...
Can someone help me with this problem? Thank you for
everything!
QUESTION 11 Consider an industry served by two firms, say firm 1 and firm 2, that sell identical goods The firms set prices P and P2 simultaneously to maximise profits and each firms has constant marginal costs of production. Suppose that marginal costs are c1 - C2-c, 0< c<5 and the demand faced by firm 1 0 if P1 > P2 4 50if P1 < P2 And by firm...
Problem 3. Cournot Competition with Different Costs Suppose there are two firms engaged in quantity competition....
Problem 3. Cournot Competition with Different Costs Suppose there are two firms engaged in quantity competition. The demand is P = 2 - Q where Q =q1+q2. Assume ci = 1 and c2 = , i.e., Firm 2 is more efficient. Compute the Cournot equilibrium (i.e., quantities, price, and profits).
Two firms in an industry engaged in Bertrand competition. The industry inverse demand function is p...
Two firms in an industry engaged in Bertrand competition. The industry inverse demand function is p = 40 - 2Q, and marginal cost is MC = 10 for both firms. No firm faces capacity constraints. Find the BertrandNash equilibrium (prices, quantities, profits consumer surplus, total surplus, herfindahl index and lerner index)
4. Homogenous product Bertrand. Suppose that the demand for marbles is given by Q- 80 -...
4. Homogenous product Bertrand. Suppose that the demand for marbles is given by Q- 80 - 5P, where Q is measured in bags of marbles. There are two firms that supply the market, and the firms produce identical marbles (i.e., they are homogenous products). Firm 1 has a constant marginal cost of $10.00/bag, while firm 2 has a constant marginal cost of S5.00/bag. The two firms compete in price. In Nash Equilibrium, what prices will the two firms set? How...
Suppose there are two firms in a market producing differentiated products. Both firms have MC=0. The...
Suppose there are two firms in a market producing differentiated products. Both firms have MC=0. The demand for firm 1 and 2’s products are given by: q1(p1,p2) = 5 - 2p1 + p2 q2(p1,p2) = 5 - 2p2 + p1 a. First, suppose that the two firms compete in prices (i.e. Bertrand). Compute and graph each firm’s best response functions. What is the sign of the slope of the firms’ best-response functions? Are prices strategic substitutes or complements? b. Solve...
Problem 3. Cournot Competition with Different Costs Suppose there are two firms engaged in quantity competition....
Problem 3. Cournot Competition with Different Costs Suppose there are two firms engaged in quantity competition. The demand is P = 2 - Q where Q=q1 +22. Assume cı = { and c2 = , i.e., Firm 2 is more efficient. Compute the Cournot equilibrium (i.e., quantities, price, and profits). price, and profits).
Differentiated Bertrand competition versus price leadership. The demand for two brands of laundry detergent, Wave (W)...
Differentiated Bertrand competition versus price leadership. The demand for two brands of laundry detergent, Wave (W) and Rah (R), are given by the following demands: Qw =80–2pW +pR QR =80–2pR +pWThe firms have identical cost functions, with a constant marginal cost of 10. The firms compete in prices. (a) What is the best response function for each firm? (that is, what is firm W's optimal price as a function of firm R’s price, and vice-versa?) What is the equilibrium to...
Problem 4. Bertrand Competition with Different Costs Suppose two firms facing a demand D(p) compete by setting prices simultaneously (Bertrand Competition). Firm 1 has a constant marginal cost ci and Firm 2 has a marginal cost c2. Assume ci < C2, i.e., Firm 1 is more efficient. Show that (unlike the case with identical costs) p1 = (1 and p2 = c2 is not a Bertrand equilibrium.
Problems 3,4 and 5
Problem 3. Consider the game below. (a) There are no dominant or dominated strategies. Is there anything you can say about what players will do? Player 2 C T (2,1) (0,2) M (1,1) (1,1)| (1,0) B(0,1) (2,0) (2,2) (0,3) Player (b) Report the best responses Problem 4. Bertrand Competition With Different Costs Suppose two firms facing a demand Dip) compete by setting prices simultaneously (Bertrand Competition). Firm 1 has a constant marginal cost e and Firm...
Consider the following variation of the Bertrand competition model (e.g., price competition) discussed in class. Two firms, 1 and 2, are producing the same identical product. Firms compete in prices: Firm 1 choses pı, and Firm 2 choses p2. Given pı and p2, the individual demands of fhrms are: 10-pi pi 〈 p2 Pi P2 0 P1〈P2 Both firms have constant marginal costs of c. To sum up, the payoffs are as follows: 2 C 92 (P1, P2 Unlike the...
Can someone help me with this problem? Thank you for
everything!
QUESTION 11 Consider an industry served by two firms, say firm 1 and firm 2, that sell identical goods The firms set prices P and P2 simultaneously to maximise profits and each firms has constant marginal costs of production. Suppose that marginal costs are c1 - C2-c, 0< c<5 and the demand faced by firm 1 0 if P1 > P2 4 50if P1 < P2 And by firm...
Problem 3. Cournot Competition with Different Costs Suppose there are two firms engaged in quantity competition. The demand is P = 2 - Q where Q =q1+q2. Assume ci = 1 and c2 = , i.e., Firm 2 is more efficient. Compute the Cournot equilibrium (i.e., quantities, price, and profits).
4. Homogenous product Bertrand. Suppose that the demand for marbles is given by Q- 80 - 5P, where Q is measured in bags of marbles. There are two firms that supply the market, and the firms produce identical marbles (i.e., they are homogenous products). Firm 1 has a constant marginal cost of $10.00/bag, while firm 2 has a constant marginal cost of S5.00/bag. The two firms compete in price. In Nash Equilibrium, what prices will the two firms set? How...
Problem 3. Cournot Competition with Different Costs Suppose there are two firms engaged in quantity competition. The demand is P = 2 - Q where Q=q1 +22. Assume cı = { and c2 = , i.e., Firm 2 is more efficient. Compute the Cournot equilibrium (i.e., quantities, price, and profits). price, and profits).
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