What is the nash equilibrium-equilibria of game

Assignment Help Business Economics

Reference no: EM13897032

Consider Bertrand competition with homogeneous products. Two firms, 1 and 2, produce an identical product and compete by choosing price. Consumers buy from the firm with the lower price. If the prices are identical, however, assume all consumers buy from firm 1. Inverse demand for the product is given by Q = 80 − P and each firm has a marginal cost of 10. Assume that the firms can only set integer prices, so if one wants to undercut the other by the smallest amount possible, the undercut must be at least a dollar.

(a) Write out the best response function of firm 1 for any price that firm 2 could choose. 1

(b) Write out the best response function of firm 2 for any price that firm 1 could choose.

Reference no: EM13897032

Questions Cloud

General equilibrium-contract curve for initial allocation : Bert has an initial endowment of 10 units of food and 10 units of clothing. Ernie’s initial endowment consists of 10 units of food and 20 units of clothing. Represent these initial endowments in an Edge worth Box. Describe the set of allocations that..

Write an essay on judicial activism : Write an essay on (or discuss) judicial activism. Present the arguments on both sides of the question as to whether judges should interpret or simply apply the Constitution. Provide more current examples (the current Supreme Court docket) and predict..

Calculate the monthly usage index for each month : Calculate the monthly usage index for each month. Use simple linear regression to forecast total usage of pallets for year 5. Forecast the seasonally adjusted usage for pallets for each month in year 5.

Describe digital logic circuit on behavioral and gate level : describe digital logic circuit on behavioral and gate level;

What is the nash equilibrium-equilibria of game : Consider Bertrand competition with homogeneous products. Two firms, 1 and 2, produce an identical product and compete by choosing price. Consumers buy from the firm with the lower price. Write out the best response function of firm 1 for any price th..

Does negotiated rulemaking result in better regulations : Does negotiated rulemaking result in better regulations and is it perceived as more valid by the interested parties? Why is it a better process than regulations generated through traditional notices and comment rulemaking?

Substantial budget deficit : The United States Federal Government has been running a substantial budget deficit since the 1970s and national savings levels have been steadily falling. Given this, can you explain why investment has remained positive and has been growing steadily ..

Discuss concepts of productive employee behavior : Evaluate the different employee motivation theories and discuss some applications to organizational settings. Examine the concepts of job satisfaction and how it applies to a success or failure. Discuss concepts of productive employee behavior

Small businesses will participate in global trade in future : About 95 percent of the world's population lives outside the United States, but many U.S. companies, especially small businesses, still do not engage in global trade. Why not? Do you think more small businesses will participate in global trade in the..

User Account

All Pages