Q.2 Two firms (i- 1, 2) produce differentiated produets. The market-clearing price is given by: pl60-lj,...
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
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.
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...
2 Two firms compete in a market by selling differentiated products. The demand equations are given by the following equations: P2 91 = 75 - Pi + P1 92 = 75 - P2 + 2 assume that each firm has a marginal cost (and average costs) of o. a. What market model do we use if each firm competes by simultaneously choosing price? b. Are the two goods substitutes? C. Solve for firm 1's best response function. d. Solve for...
There are 2 firms in a market producing differentiated products. The firms both have MC that is equal to 0 Firm 1 demand is q1(p1,p2) = 6-2p1 + p2 Firm 2 demand is q2(p1,p2) = 6-2p2 + p1 1. Firms compete in quantities- Cournot Competition. What are the inverse demand functions for firm 1 and 2? 2. Find and graph each firm’s best response functions. The quantities are strategic substitutes or complements? 3. Find the Nash equilibrium prices and quantities...
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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....
(2) Differentiated goods Rather than identical goods, now the two firms are producing differentiated goods, with each behaves as the competitor to the other. Specifically, two goods have following market demand functions: qı = D1(P1, P2) = 110 – P1 + 2p2 92 = D2 (P1, P2) = 55 – 2p2 + P1 Also, two firms have following marginal costs: MC1 = 10, MC2 = 5 Please calculate what is the equilibrium price and quantity for 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...
Consider two firms (Firm A and Firm B) competing in this market. They simultaneously decide on the price of the product in a typical Bertrand fashion while producing an identical product. Both firms face the same cost function: C(qA) = 12qA and C(qB) = 12qB, where qA is the output of Firm A and qB is the output of Firm B. The demand curve is P = 30 - Q. (i) What will be the Bertrand-Nash equilibrium price (pB) chosen...