What prices will they choose in the stage nash equilibrium

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Two firms are playing an infinitely repeated Bertrand game, each with the same marginal cost 20. The market demand function is given by P=150-Q. The firm who charges the lower price wins the whole market. When they charge the same price, each gets 1/2 of the total market.

A. In the stage game (only one period), if the firms collude with each other, then what prices will they choose?

B. What prices will they choose in the stage Nash equilibrium (only one period)?

C. Suppose this two firms compete with each other in more and more common markets. Is it harder or easier for them to collude with the increased number of markets? Explain your argument in detail.

Reference no: EM131163752

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