Equilibria than continuous pricing, Managerial Economics

Assignment Help:

Two firms are engaged in Bertrand competition. Both firms have a stable marginal cost of €7. Presently, every firm is allocated half the market. There are 10,000 people in the population and every of them are willing to pay at most €12 for one unit of the good. Further, consumers can Only purchase one unit of the good and it costs every of them ? to switch from one firm to another. Suppose that there is perfect information in this market, which means that customers know what prices are being charged. Law or custom restricts the firms to charging whole amounts (e.g., they can charge €8, but not €8.50).

a) Suppose that switching costs are zero. What are the Nash equilibria of this model? Why does discrete pricing result in more equilibria than continuous pricing?

 


Related Discussions:- Equilibria than continuous pricing

Emergence of managerial economics, The emergence of managerial economics as...

The emergence of managerial economics as a separate course of management studies can be attributed to at least three factors: 1.      Growing complexity of business designs maki

Manegerial discretion, How relevent is managerial dicretion in developing c...

How relevent is managerial dicretion in developing countries?

Non-accelerating inflation rate of unemployment, NON-ACCELERATING INFLATION...

NON-ACCELERATING INFLATION RATE OF UNEMPLOYMENT   During 1970s economists encountered a puzzle  in  the sense that  inflation and unemployment  data  did not  fit  into the Phi

Theory of multiplier, income generation process through investment multipli...

income generation process through investment multiplier

Surplus, Suppose market demand and supply are given by Qd = 100 – 2P and QS...

Suppose market demand and supply are given by Qd = 100 – 2P and QS = 5 + 3P. If a price floor of $20 is set, what will be the size of the resulting surplus?

Describe the application of economic theories, Describe the Application of ...

Describe the Application of economic theories Pertinent business decisions necessitate an unambiguous understanding of the environmental and technical conditions under which bu

Social cost and benefits, iwant presentation on united postal services on s...

iwant presentation on united postal services on social cost and benefits

Explanation of business cycle, Causes There are a number of explanatio...

Causes There are a number of explanations of the business cycle but changes in the level of investment seem to be the most likely.  In the simplest Keynesian model an increase

Limits on the process of bank deposit creation, Limits on the process of ba...

Limits on the process of bank deposit creation On the demand side , there may be a lack of demand for loans, or at least of borrowers who are sufficiently credit worthy .

Types of price elasticity of demand, Types of Price Elasticity of demand ...

Types of Price Elasticity of demand   a)     Perfectly inelastic demand Demand is said to be perfectly inelastic if changes in price have no the quantity demanded so

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd