Consider a homogeneous duopoly market

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Reference no: EM13740664

Consider a homogeneous duopoly market where two Örms compete in prices (Bertrand). Demand is given by D(p) = 16 2p. There are no production costs.

a. If the capacity of one firm is 1, and of the other it is 2, what are the equilibrium prices?

b. If the capacity of both firms is 6, is there equilibrium in pure strategies?

c. Explain the difference between the (a) and (b).

Reference no: EM13740664

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