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Explain why the nash-bertrand equilibrium price

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Question 1:
Many retail stores offer to match or beat the price offered by the rival store. Explain why firms that belong to a cartel might make this offer?

Question 2:
What are the main factors that increase the likelihood of a cartel being successful?

Question 3:
In a Nash-Cournot equilibrium, does an oligopoly firm produce at less than full capacity, at full capacity, or more than full capacity? Please explain.

Question 4:
If firms produce identical products and have the same constant marginal cost, m, explain why the Nash-Bertrand equilibrium price and market quantity are the same regardless of whether there are two or more firms.

Question 5:
In a monopolistically competitive market, the government applies a specific tax of $1 per unit of output. What happens to the profit of a typical firm in this market? Does the number of firms in the market rise or fall? Please explain.

Question 6:

Two firms compete by advertising. Given the payoff matrix to this advertising game, identify each firm's best response to its rival's possible actions. Does either firm have a dominant strategy? What is the Nash equilibrium?

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Question 7:

Nicole employs Joshua. She wants him to work hard rather than loaf. She considers offering him a bonus or not giving him one. All else same, Joshua prefers to loaf. If they choose actions simultaneously, what are their strategies?

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Question 8:
Given these profits, Firm 2 want to match Firm 1's price, but Firm 1 does not want to match Firm 2's price. Does either firm have a dominant strategy? Does this game have a unique, pure strategy Nash equilibrium? Identify all pure- and mixed-strategy Nash equilibria?

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Verified Expert

This assignment is based on the concepts of macroeconomics. In this work, we have to discuss the market oligopoly, monopoly, graphical representation of the dominant strategy, likelihood of the Cartel.

Reference no: EM131644272

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