Solve for the bayesian nash equilibrium

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Reference no: EM131252508

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 c_L and a probability 1 - μ of having a marginal unit cost of c_H. These probabilities are common knowledge, but the true type is revealed only to each firm individually. Solve for the Bayesian Nash equilibrium.

Reference no: EM131252508

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