From calculation we see that firm 2 makes more profit than firm 1 in sequential game
1 (Bertrand Model with sequential move) Consider a Bertrand duopoly model with two firms, Fi and...
(2) Consider the following game: P U M D LR 3,1 0,2 1,2 1,1 0,4 3,1 (a) Show that M is a dominated strategy when mixed strategies are used. (b) Using the observation in part (a) above, find the mixed strategy NE for this game. (3) (Bertrand Model with sequential move) Consider a Bertrand duopoly model with two firms, F and F2 selling two varieties of a product. The demand curve for Fi's product 91 (P1.p2) = 10 - P1...
Please answer the following question fully and in detail! Consider a Bertrand duopoly with two firms 1,2 who sell the same good. The demand curve of the good is given by Q = 30 − p if p < 30 and Q = 0 if p ≥ 20. Both firms have the same constant unit cost 5. Firms 1,2 set prices p1, p2. If firms set different prices, then the firm which sets the minimum price of the two, receives...
Please answer the following question fully and in detail! Consider a Bertrand duopoly with two firms 1,2 who sell the same good. The demand curve of the good is given by Q = 15 − p if p < 15 and Q = 0 if p ≥ 15. Both firms have the same constant unit cost 2. Firms 1,2 set prices p1, p2. If firms set different prices, then the firm which sets the minimum price of the two, receives...
Which of the following statements is correct? a. The Bertrand model is a game involving two identical firms, producing identical products at a constant marginal (and average) cost, and, simultaneously, choosing prices. b. The Cournot model is similar to the Bertrand model except that firms are assumed to simultaneously choose quantities rather than prices. c. The Stackelberg model is similar to a duopoly version of the Cournot model except that—rather than simultaneously choosing the quantities of their identical outputs—firms move...
2.13. Recall the static Bertrand duopoly model (with homoge- neous products) from Problem 1.7: the firms name prices simul- taneously; demand for firm i's product is a - Pi if Pi < Pi, is 0 if Pi > Pi, and is (a – Pi)/2 if Pi = Pj; marginal costs are c < a. Consider the infinitely repeated game based on this stage game. Show that the firms can use trigger strategies (that switch forever to the stage-game Nash equilibrium...
5. Bertrand model: Price competition in simultaneous move homogeneous product duopoly—explain in words. Consider the brick producers again. This time, each firm simultaneously and independently picks the price. Since the product is homogeneous, the consumer buys from the producer offering at a cheaper price. The market demand curve faced by the two firms is P=1 - 50000 (x+y), and costs are C1(x) = 0.02x and C (y) = 0.02y, where firm 1 produces x units and firm 2 produces y...
4. Consider about a duopoly case: two firms compete by choosing prices for two differentiated goods. Their demand functions are Q1 = 20-P1+ P2 and Q2-20 + P1-P2, where Pi and P2 are the prices charged by each firm, respectively, and Qi and Q2 are the resulting demands. Fixed costs and marginal costs are both zero. (a) Suppose the two firms set their prices at the same time. Find the resulting Na equilibrium. What price will each firm charge, how...
Microeconomics 4. Consider about a duopoly case: two firms compete by choosing prices for two differentiated goods. Their demand functions are Q1 20-P1 + P2 and Q2 20 +P1-P2, where Pi and P2 are the prices charged by each firm, respectively, and Qi and Q2 are the resulting demands. Fixed costs and marginal costs are both zero. (o) Suppose the two frms set their prices at the same time. Find the resalting Na equilibrium. What price will each firm charge,...
Choose a,b,c,d 4. Consider about a duopoly case: two firms compete by choosing prices for two differentiated goods. Their demand functions are Q1 20-P1 + P2 and Q2 20 +P1-P2, where Pi and P2 are the prices charged by each firm, respectively, and Qi and Q2 are the resulting demands. Fixed costs and marginal costs are both zero. (o) Suppose the two frms set their prices at the same time. Find the resalting Na equilibrium. What price will each firm...
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...