2. Two firms produce homogeneous products. Market demand is given by Q = 40-P, and each firm face...
Problem three Two firms in a homogencous-product duopoly market (firm 1 and firm 2) have the following cost and demand functions: TC 4 TC24q2 and Q-40-P: Q-+2 a Derive the reaction function/best-response function for each firm. b) Assume that the firms play a simultaneous move game. Characterize the Nash Equilibrium. cSuppose the two firms play game is a sequential game with the following timing of events: 1. Firm 1 chooses output 2. Firm 2 observes firm 1's output and then...
Q.2 Two firms produce homogeneous products. The inverse demand function is: p(x1,x2)-a-x1- x2, where x is the quantity chosen by firm 1, x2 the quantity chosen by firm 2, and a > 0. The cost functions are C1 (x1)-x follower. and C2(x2)- . Firm I is a Stackelberg leader and firm 2 a Stackelberg Q.2.a Find the subgame-perfect quantities. Q.2.b Calculate each firm's equilibrium profit.
Problem 4. Three firms operate in an oligopoly market with inverse demand function given by D(Q)a Q, where Q- 1 42 +q3 and q, represents the quantity produced by firm i. Each firm has constant marginal cost of production c and no fixed cost, assume that 0<c<a. The firms compete in the market by choosing quantities in the following way. Firm 1, the industry leader, chooses gi20. Firms 2 and 3 both observe qi. Firm 2 then chooses q2 2...
Consider a three firm oligopoly in which the market demand for the homogeneous good is given by q = 24 - p, and costs are zero. Suppose firm 1 and 2 simultaneously pick their output, and then firm 3, observing these choices, picks its output (i.e. two “leaders”, one “follower”). Find the subgame perfect equilibrium for this model. Also show that the outcome in which each firm produces 6 units of output can be supported as Nash equilibrium, but not...
3. (35 points Suppose that there are K( 3) firms operate in a market with demand function given by P(Q) = 100-Q, where Q=91 +92 + ... +2K, and qi is the quantity produced by firm i. Each firm has a constant marginal cost of production, c = 10, and no fixed cost. The firms choose their quantities dynamically as follows: Firm 1, which is the industry leader, chooses qı € (0, 100). All other firms i = 2,..., K...
Q.3 Two firms (i 1, 2) produce differentiated products. The demand function for the product of firm i is given by: qiVi, pj) 4-pi + 2pj firm i and pj the price chosen by its competitor. Firm 1 chooses its price first and firm 2 chooses its price after observing the price of firm 1. The cost function of each firm is G(%) 21. Find the subgame-perfect Nash equilibrium. , where Pi is the price chosen by
Q.3 Two firms (i 1, 2) produce differentiated products. The demand function for the product of firm i is given by: qiVi, pj) 4-pi + 2pj firm i and pj the price chosen by its competitor. Firm 1 chooses its price first and firm 2 chooses its price after observing the price of firm 1. The cost function of each firm is G(%) 21. Find the subgame-perfect Nash equilibrium. , where Pi is the price chosen by
Suppose that the inverse market demand for a commodity is given by P = 240 Q The cost curves of the three firms which could serve this market are TC,(a) 30q +300 and TC2() (d) Suppose that firms engage in Stackelberg rather than Cournot competition. Firm 1 moves first by choosin its output level. After Firm 1 has chosen its output level, Firm 2 observes ql and chooses its output leve Find the subgame-perfect Nash equilibrium of the Stackelberg game....
Suppose two firms compete by selecting quantities q1 and q2, respectively, with the market price given by p = 1000-3q1 -3q2. Firm 1 (the incumbent) is already in the market. Firm 2 (the potential entrant) must decide whether or not to enter and, if she enters, how much to produce. First the incumbent commits to its production level q2. The potential entrant, having seen q1, decides whether to enter the industry. If firm 2 chooses to enter, then it selects...
Two firms sequentially choose quantities q1, q2 to produce an identical good. First, firm 1 chooses q1, then firm 2 chooses q2. The price per unit in the market is p(q1, q2) = 1 − (q1 + q2). Assume that both firms have a constant marginal cost of zero. Both firms seek to maximize their profit. a. Formulate this story as an extensive form game b. Find all Nash equilibria of this game. c. Find the Subgame Perfect Nash equilibria...