Consider the cournot duopoly model in which two firms

Reference no: EM13547838

Cournot Revisited: Consider the Cournot duopoly model in which two firms, 1 and 2, simultaneously choose the quantities they supply, q1 and q2. The price each will face is determined by the market demand function p(q1, q2) =a - b(q1+ q2). Each firm has a probability μ of having a marginal unit cost of cL and a probability 1- μ of having a marginal unit cost of cH. These probabilities are common knowledge, but the true type is revealed only to each firm individually. Solve for the Bayesian Nash equilibrium.

Reference no: EM13547838

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