Find the price best-response function for firm i

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Reference no: EM131175525

An industry consists of two firms. The demand function for the product of firm i is

qi = 24 - 5pi + 2pj .

The marginal cost of production for each firm is zero.

(a) Find the price best-response function for firm i.

(b) Assume the firms compete over prices once; find the Nash equilibrium in prices.

(e) What are collusive profits? Bertrand profits? (f) What is the optimal defection from the collusive agreement?

Reference no: EM131175525

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