Suppose four firms engage in price competition in Bertrand setting in which the lowest-price firm will...
Suppose four firms engage in price competition in Bertrand setting in which the lowest-price firm will capture the entire market. The firms differ with respect to their costs:
? Firm A’s marginal cost per unit is 8 USD
? Firm B’s marginal cost per unit is 7 USD
? Firm C’s marginal cost per unit is 9 USD
? Firm D’s marginal cost per unit is 7.5 USD
(a) Which firm will serve the market? What price it would charge?
(b) Would the equilibrium situation change if firms A and B had
greater fixed costs than firms C and D?
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Suppose four firms engage in price competition in Bertrand
setting in which the lowest-price firm will...
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.
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 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 = C1 and P2 = c2 is not a Bertrand equilibrium.
Suppose two firms are engaged in price competition (also known as Bertrand competition). Neither firm has...
Suppose two firms are engaged in price competition (also known as Bertrand competition). Neither firm has capacity constraints, and both firms have identical cost structures given by c(y)= 10+ 2y? What are the equilibrium profits for each firm?
1. Consider two firms engaging in Bertrand Competition. Each firm picks a price at which to...
1. Consider two firms engaging in Bertrand Competition. Each firm picks a price at which to charge for their good. All of the demand for the good goes to the firm with the lowest price, where the quantity demanded = 1000-P. If the firms’ prices are the same, firm 1 gets all of the demand. The cost-per-product produced by firm 1 is MC=2, and the costper-product produced by firm 2 is MC=5. Suppose that the firms can charge any continuous...
Suppose identical price setting duopoly firms have constant marginal costs of $50 per unit and no...
Suppose identical price setting duopoly firms have constant marginal costs of $50 per unit and no fixed costs. Consumers view the firms' products as perfect substitutes. The market demand is Q = 90 - p. In Bertrand equilibrium, firm 1's price is $_and firm 2's price is $ . (Enter numeric responses using integers.)
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2.2 Bertrand Competition Which of the following statement is NOT true? In a market of duopoly firms competing in quantities, the equilibrium price is higher than the marginal cost of firms. In a market of duopoly firms competing in quantities, the equilibrium price is lower than the price charged by a monopoly firm. In a market of duopoly firms competing in prices, the more efficient firm survives and charges a price equals to its marginal cost. ) In a market...
consider the standard Bertrand model of price competition. There are two firms that produce a homogenous...
consider the standard Bertrand model of price competition. There
are two firms that produce a homogenous good with the same constant
marginal cost of c.
a) Suppose that the rule for splitting up cunsumers when the
prices are equal assigns all consumers to firm1 when both firms
charge the same price. show that (p1,p2) =(c,c) is a Nash
equilibrium and that no other pair of prices is a Nash
equilibrium.
b) Now, we assume that the Bertrand game in part...
5. Suppose there is a market of yellow umbrellas and there are two firms who are...
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4. Bertrand Competition (29 points) Consider a Betrand Model. The market demand is P-180-Q. Consumers only...
4. Bertrand Competition (29 points) Consider a Betrand Model. The market demand is P-180-Q. Consumers only buy from the firm charging a lower price. If the two firms charge the same price, they share the market equally. The marginal cost for firm 1 is 30, and the marginal cost for firm 2 is also 30. There are no fixed costs. A. (5 points) Would any firm charge a price below 30 at the market equilibrium? Briefly explain your reason B....
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...
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.
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 = C1 and P2 = c2 is not a Bertrand equilibrium.
Suppose two firms are engaged in price competition (also known as Bertrand competition). Neither firm has capacity constraints, and both firms have identical cost structures given by c(y)= 10+ 2y? What are the equilibrium profits for each firm?
Suppose identical price setting duopoly firms have constant marginal costs of $50 per unit and no fixed costs. Consumers view the firms' products as perfect substitutes. The market demand is Q = 90 - p. In Bertrand equilibrium, firm 1's price is $_and firm 2's price is $ . (Enter numeric responses using integers.)
2.2 Bertrand Competition Which of the following statement is NOT true? In a market of duopoly firms competing in quantities, the equilibrium price is higher than the marginal cost of firms. In a market of duopoly firms competing in quantities, the equilibrium price is lower than the price charged by a monopoly firm. In a market of duopoly firms competing in prices, the more efficient firm survives and charges a price equals to its marginal cost. ) In a market...
consider the standard Bertrand model of price competition. There
are two firms that produce a homogenous good with the same constant
marginal cost of c.
a) Suppose that the rule for splitting up cunsumers when the
prices are equal assigns all consumers to firm1 when both firms
charge the same price. show that (p1,p2) =(c,c) is a Nash
equilibrium and that no other pair of prices is a Nash
equilibrium.
b) Now, we assume that the Bertrand game in part...
5. Suppose there is a market of yellow umbrellas and there are two firms who are producing these umbrellas. Firm A has a marginal cost of 25. Firm B has a marginal cost of 10. The demand for yellow umbrellas is captured with the following inverse-demand function: P - 1000 - 200. What are the equilibrium price in Bertrand competition? As a reminder, Bertrand competition is the setting in which the firms directly pick the price. Knowing that can you...
4. Bertrand Competition (29 points) Consider a Betrand Model. The market demand is P-180-Q. Consumers only buy from the firm charging a lower price. If the two firms charge the same price, they share the market equally. The marginal cost for firm 1 is 30, and the marginal cost for firm 2 is also 30. There are no fixed costs. A. (5 points) Would any firm charge a price below 30 at the market equilibrium? Briefly explain your reason B....
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...
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