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10. Suppose that two firms produce smartphones, one with a soft case and the other with...
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...
Suppose we have two firms with the same cost C(q) = {Q2 in a market which...
Suppose we have two firms with the same cost C(q) = {Q2 in a market which demand is Q 18 – P, the two firms compete in the Cournot Model. a. Set up firm 1's profit maximization and best response function. b. Solve for firm 1's quantity, firm 2's quantity, the equilibrium market quantity, and price. Please show your work. c. Is this a Nash equilibrium?
Exercise 11.3 Consider the following duopoly model. There are two firms sup- plying a market where...
Exercise 11.3 Consider the following duopoly model. There are two firms sup- plying a market where demand is given by p(Q)- a-bQ. Firm i produces qi units of output and so the total level of production is q1q2. Both firms face the same constant marginal cost, so the cost of producing qi for firm i įs cqỉ. Thus the profit functions of firms 1 and 2 respectively, are given by: (a) Suppose that each firm takes the output of the...
Suppose two firms cannot collude and compete in the Cournot Model. Market demand is Q =...
Suppose two firms cannot collude and compete in the Cournot Model. Market demand is Q = 18 – P with the cost (c(Q) =*Q). a. Set up firm l's profit maximization. b. Solve for firm l's best response function. c. Solve for firm l's quantity, firm 2's quantity, the equilibrium market quantity, and price. Show your work. d. Is this a Nash equilibrium?
The answers I filled are wrong. 1 Suppose that two identical firms produce widgets and that...
The answers I filled are wrong.
1 Suppose that two identical firms produce widgets and that they are the only firms in the market. Their costs are given by C1 = 60Q1 and C2 = 60Q2, where Q1 is the output of Firm 1 and Q2 is the output of Firm 2. Price is determined by the following demand curve: P= 900-Q where Q = Q1 +Q2: Find the Cournot-Nash equilibrium. Calculate the profit of each firm at this equilibrium....
Suppose the two firms cannot collude and instead compete in the Cournot Model in the market...
Suppose the two firms cannot collude and instead compete in the Cournot Model in the market described in question 1 (market demand is still Q=18-P) with the same cost (C(Q)=1/2 *Q^2). Set up firm 1’s profit maximization. Solve for firm 1’s best response function. Solve for firm 1’s quantity, firm 2’s quantity, the equilibrium market quantity, and price. Show your work. Is this a Nash equilibrium? Do consumers prefer the Cournot competition equilibrium over the collusion of the two firms...
3. Suppose the two firms cannot collude and instead compete in the Cournot Model in the...
3. Suppose the two firms cannot collude and instead compete in the Cournot Model in the market described in question 1 (market demand is still Q = 18 – P) with the same cost (C(Q)=Q2). a. Set up firm 1's profit maximization. b. Solve for firm 1's best response function. C. Solve for firm 1's quantity, firm 2's quantity, the equilibrium market quantity, and price. Show your work. d. Is this a Nash equilibrium? e. Do consumers prefer the Cournot...
Q4. Suppose a duopoly is characterized by the following profits: if the two firms collude and...
Q4. Suppose a duopoly is characterized by the following profits: if the two firms collude and charge the joint profit-maximizing price, they each earn a profit equal to 1500 in each period; if the two firms charge the Cournot–Nash price, they each earn a profit equal to 1200 in each period; and if one firm defects while the other charges the joint profit-maximizing price, the firm that defects earns 3000 and the other earns 0. [20 marks] a) [3 marks]...
Consider the case of two firms competing in a market. Each firm has a constant marginal...
Consider the case of two firms competing in a market. Each firm has a constant marginal cost equal to $10. The demand function is D(p) = 100 − p (p is the price in cents) Firms are competing by choosing prices simultaneously. When prices are equal, each firm gets exactly one half of the total demand. P must be an integer value. 1. Find all the Nash equilibria of this duopoly game. 2. Calculate each firms profit under any equilibria. 3....
5. Consider two firms selling differentiated varieties of a product, e.g., Coke and Pepsi. Each firm...
5. Consider two firms selling differentiated varieties of a product, e.g., Coke and Pepsi. Each firm j chooses a price pj for its own variety. Since these varieties are close substitutes, the demand that each firm faces depends not only on its own price, but also the price of its competitor. Specifically, the demand for j’s variety is given by Dj (pj , p−j ) = max 0, 60 + p−j − 2pj Suppose that both firms can produce any...
Suppose we have two firms with the same cost C(q) = {Q2 in a market which demand is Q 18 – P, the two firms compete in the Cournot Model. a. Set up firm 1's profit maximization and best response function. b. Solve for firm 1's quantity, firm 2's quantity, the equilibrium market quantity, and price. Please show your work. c. Is this a Nash equilibrium?
Exercise 11.3 Consider the following duopoly model. There are two firms sup- plying a market where demand is given by p(Q)- a-bQ. Firm i produces qi units of output and so the total level of production is q1q2. Both firms face the same constant marginal cost, so the cost of producing qi for firm i įs cqỉ. Thus the profit functions of firms 1 and 2 respectively, are given by: (a) Suppose that each firm takes the output of the...
Suppose two firms cannot collude and compete in the Cournot Model. Market demand is Q = 18 – P with the cost (c(Q) =*Q). a. Set up firm l's profit maximization. b. Solve for firm l's best response function. c. Solve for firm l's quantity, firm 2's quantity, the equilibrium market quantity, and price. Show your work. d. Is this a Nash equilibrium?
The answers I filled are wrong.
1 Suppose that two identical firms produce widgets and that they are the only firms in the market. Their costs are given by C1 = 60Q1 and C2 = 60Q2, where Q1 is the output of Firm 1 and Q2 is the output of Firm 2. Price is determined by the following demand curve: P= 900-Q where Q = Q1 +Q2: Find the Cournot-Nash equilibrium. Calculate the profit of each firm at this equilibrium....
3. Suppose the two firms cannot collude and instead compete in the Cournot Model in the market described in question 1 (market demand is still Q = 18 – P) with the same cost (C(Q)=Q2). a. Set up firm 1's profit maximization. b. Solve for firm 1's best response function. C. Solve for firm 1's quantity, firm 2's quantity, the equilibrium market quantity, and price. Show your work. d. Is this a Nash equilibrium? e. Do consumers prefer the Cournot...
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