Find the two nash-equilibrium prices as a function

Reference no: EM13179826

To firms compete, and they are placed in each end of a line with length 1. Firm 1 at point 0 and firm 2 at point 1. The consumers transportation cost are linear in the distance to the firms localisation (d1 and d2) and the consumers are uniformly distributed on the intervall (0,1) where x E (0,1) denotes the consumers preferences. The consumer buys maximum one unit of the good, either from firm 1 or from firm 2. The utility of consumer x from the good from firm i is: \(u = s-p_{i}-t|x-d_{i}|\)

where s is the maximum willingness to pay and t transportation cost per distance unit between the consumer and the firm's localisation.

The firms have constant marginal costs given by c1 and c2.

a) FInd the two firm's reactionfunctions pi = Ri(pj) and give a graphical illustration

b) Find the two Nash-equilibrium prices as a function of the marginal costs c1 and c2, and the firm's profit.

Reference no: EM13179826

Questions Cloud

Describe overly expansionary monetary policy : The primary reason for the creation of the Federal Reserve System was (a) the desire to reduce or eliminate bank panics. (b) the desire to stabilize short-term interest rates. (c) the desire to eliminate state-chartered banks. (d) the desire to cr..

Is there a way for scientists to correct for these errors : Is there a way for scientists to correct for these errors? Why or why not? Next, reply to a classmate's response and ask a question about the response that you think a high school student would ask.

Prepare the journal entry to close the balance : Prepare the journal entry to close the balance in Manufacturing Overhead to the appropriate accounts and understand how to record the flow of materials, labor, and overhead through a process costing system.

Criminal law statutes : Criminal law statutes now protect your name and identity, your communications, and your ideas. Match each of these categories with the appropriate criminal law statute and explain how each statute can be violated.

Find the two nash-equilibrium prices as a function : Firm 1 at point 0 and firm 2 at point 1. The consumers transportation cost are linear in the distance to the firms localisation (d1 and d2) and the consumers are uniformly distributed on the intervall (0,1) where x E (0,1) denotes the consumers p..

Analyze actual and real life marketing management : Students will select a real Life Company and will analyze and identify the Marketing plan and strategy of the company in terms of STP (Segmentation, Targeting & Positioning), Competitor analysis, Product strategy, Price strategy, Distribution strateg..

What is the mean wage of women and men : Suppose that a researcher, using wage data on 250 randomly selected male workers and 280 female workers, estimates the OLS regression Wage = 12.52+2.12× Male,R^2 = 0.06,SER = 4.2, (.23) (0.36) where Wage is measured in dollars per hour and Male is ..

Terrorist extremism and political violence : Explain the genesis of US terrorist extremism and what seem to be the principal drivers behind US political violence as seen in the past 200 years.

What situations would make rectangular : What situations would make rectangular, cylindrical or spherical integration best? Is integration over other coordinate systems possible or ever ideal?

User Account

All Pages