Uncertain demand, Applied Statistics

Assignment Help:

Consider a Cournot duopoly with two firms (fi rm 1 and fi rm 2) operating in a market with linear inverse Demand P(Q) = x Q where Q is the sum of the quantities produced by both rms and x is a parameter that captures the level of demand in this industry. Firms have 0 cost of production. The demand for the good is uncertain: it is high, x = xH, with probability 1/3 and it is low, x = xL (< xH), with probability 2/3. Furthermore, information is asymmetric: rm 1 knows whether demand is high or low but rm 2 does not. All this is common knowledge. The two rms simultaneously choose quantities.

(a) What are the actions, types, beliefs and payo s of both rms?

(b) Suppose that 7xL > xH. Find the Bayesian Nash equilibrium of the game.

(c) Compare the quantities chosen by rms 1 and 2. Interpret the result.

Now, call q1-H and q2-H the quantities chosen by rms 1 and 2 if the demand is high under complete information (that is, when both know it). Also, call q1-L and q2-L  the quantities chosen by rms 1 and 2 if the demand is low under complete information (that is, when both know it).

(d) Find (q1-H ,  q2-H, q1-L , q2-L) Compare these quantities with the quantities determined in the case of incomplete information. Interpret the result


Related Discussions:- Uncertain demand

Example of discrete random variable, Example of discrete random variable: ...

Example of discrete random variable: 1. What is a discrete random variable? Give three examples from the field of business. 2. Of 1000 items produced in a day at XYZ Manufa

Calculation for continuous series or grouped data, Calculation for Continuo...

Calculation for Continuous Series or Grouped Data = where, m = mid-point of class   =

Use of calculators in statistics, In recent years a number of calculators a...

In recent years a number of calculators are available for doing statistical calculations over and above the usual addition, subtraction, multiplication and division. The fx-82 mode

Calculate the damping ratio for each system, (i) Plot the step responses of...

(i) Plot the step responses of the following second order systems and state the nature of each system. For each case, find the poles and plot the location of the poles in the compl

Calculate the length of the rope, The tension, T, in the tow rope pulling t...

The tension, T, in the tow rope pulling the car in Newtons is given in P8.  Determine the minimum length of the rope l, between A and B, so that the tension in either AB or AC equa

Lorenz curve , Lorenz Curve   It is a graphic method of measur...

Lorenz Curve   It is a graphic method of measuring dispersion. This curve was devised by Dr. Max o Lorenz a famous statistician.  He used this technique for wealth it i

Statistical quality control assinment, how to get statistical quality contr...

how to get statistical quality control assignment in brief?

Median, Median Median is a position average. It is the value of middle ...

Median Median is a position average. It is the value of middle item of a variable when the items are arranged according to their values either in ascending or descending order.

CERTIFICATE OF AIRWORTHINESS FOR EXPORT, CERTIFICATE OF AIRWORTHINESS FOR E...

CERTIFICATE OF AIRWORTHINESS FOR EXPORT When aircraft manufacturers go into series production of a new type of aircraft, then obviously they are hopeful of world wide sales. Sim

Regression, Regression line drawn as Y=C+1075x, when x was 2, and y was 239...

Regression line drawn as Y=C+1075x, when x was 2, and y was 239, given that y intercept was 11. calculate the residual

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