12. There are three firms competing in prices. The demand of firm i is q; = V – p; –r (Pi - E P;) (that is, q1 = V – p1 – y (P1 – } (P1 + p2 + p3)), etc.) The costs arej=11zero. Note that the demands are symmetric for all firms. What is the symmetric purestrategy NE in prices?

Total revenue determines the amount earned from the quantity produced.Economic costs involve not…

12. There are three firms competing in prices. The demand of firm i is qi = V - Pi - y (P₁ - ₁1P₁) (that is, q₁ = V − P₁ − 7 (p₁ − 3 (P₁+p2+p3)), etc.) The costs are Pi zero. Note that the demands are symmetric for all firms. What is the symmetric pure strategy NE in prices?

12. There are three firms competing in prices. The demand of firm i is qi = V - Pi - y (P₁ - ₁1P₁) (that is, q₁ = V − P₁ − 7 (p₁ − 3 (P₁+p2+p3)), etc.) The costs are Pi zero. Note that the demands are symmetric for all firms. What is the symmetric pure strategy NE in prices?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4. Two Stackelberg-competitors with no costs face the common market demand curve P=30−Q, where Q is the combined output of both firms. Firm 1, the leader, picks its output first. Then Firm 2, the follower, picks its output. How much output does Firm 2 produce in their sequential-move game? a) 3 units. b) 15 units. c) 15/2 units. d) 30 units.
All question are with regards to the following set up. There are two firms A and B. Firms compete in a Cournot Duopoly in Karhide. They set quantities qa and qB. Inverse demand is P(qA + qB) = 18 – qA – qB and costs are C(q) (in Karhide,) and firm A is a foreign firm (from Orgoreyn.) The government of Karhide engages in a strategic trade intervention by giving firm B a per unit subsidy of s. (That is, when firm B produces and sells qB units, firm B receives a payment of s * qB from the government.) You must show your work at each step, unless the questions is followed by "No work required." 3 * q for both firms. Firm B is a domestic firm (4) We now consider the government’s choice of s≥0. We can see from above thatprofits and outputs depend upon s. With that in mind, let πB(s) and qB(s) denote firm B’s profit and output as a function of the subsidy s. Let qA(s) denote firm A’s equilibrium output as a function of s. Let G(s) = πB(s) − s*qB(s) denote the government’s objective…
The payoff matrix in the figure to the right shows the payoffs for a pricing game. If you were firm A, which strategy would you choose? Firm A should A. price high because this is their maximin strategy. B. price low because this is their tit-for-tat strategy. C. price high because this is their dominant strategy. D. price low because this is their dominant strategy. E. price low because this maximizes profits of both firms. Firm B's dominant strategy is to price If this game were repeated a large number of times and you were firm A and you could change your strategy, what might you do? Firm A should O A. use a tit-for-tat strategy by responding in kind to firm B's play. B. use a maximin strategy by maximizing the minimum gain that can be earned. C. use a tit-for-tat strategy by selecting a price that minimizes firm B's profits. D. use a maximin strategy by by responding in kind to firm B's play. E. use a tit-for-tat strategy by maximizing the minimum gain that can be earned. C Price…
Q:3 a,b and c
QUESTION 13 Consider a market where two firms (1 and 2) produce differentiated goods and compete in prices. The demand for firm 1 is given by D₁(P₁, P2) = 140 - 2p1 + P2 and demand for firm 2's product is D2 (P1, P2) 140 - 2p2 + P1 Both firms have a constant marginal cost of 20. What is the Nash equilibrium price of firm 1? (Only give a full number; if necessary, round to the lower integer; no dollar sign.)
2. Walmart (firm 1) and Amazon (firm 2) are a duopoly in the grocery market. They are faced with an inverse demand of P(Q1, Q2) = 4 – 2(Q1+ Q2) and total costs of TC(Q;) = 2Q?, i = 1, 2. Note that the marginal cost is not constant! 1. Obtain the Cournot equilibrium quantities and profits. 2. Obtain the Stackelberg equilibrium in which Walmart moves first. Compare with the Cournot equilibrium. 3. Obtain the cartel outcome (= shared monopoly). Compare with Stackelberg and Cournot.
1.) Suppose you have a 10 identical firm Cournot Oligopoly. You don't have a demand equation but you do know that the market elasticity of demand is equal to -0.5 and MC = $4. What is market price? $4.00. none of the available options. $10.00 $5.00. 2.) Refer to the previous question. Suppose 2 firms leave the market. What is the new price? $5.33. $8.00. $4.00. none of the available options.
7. Jie is a firm manager deciding its sales quantity strategy. His firm is in a market with another competitor, and he is the leader in the sequential game. Collusion is impossible. The market inverse demand function is P = 16 – Q, where Q is the total quantity of q? the production. The cost functions of Jie's firm and the other firm are c(g) and c(q) = q?, respectively. So Jie should set the quantity as С. 4 A. 8 В. 6 D. 2
1. which compete in quantities (Cournot -Nash equilibrium = C) 2. which compete in quantities with the first firm (the Leader) choosing the output first (Stackelberg competition = S). 3. which collude and choose quantities in order to maximize the joint profits (behave like two plants of a multiplant monopoly = M).
2. Consider the following game: Soapy Inc. and Suddies Inc. are the only producers of soap powder. They collude and agree to share the market equally. If neither firm cheats on the agreement, each makes $1 million profit. If either firm cheats, the cheat makes a profit of $1.5 million, while the complier incurs a loss of $0.5 million. If both cheat, they break even. Neither firm can monitor the other's actions. a) Construct the payoff matrix. b) What is the dominant strategy? c) What is the nash equilibrium for this game?
8)Consider a market in which 5 companies operate, whose marginal and average costs are equal to c. The demand function is given by P(Q)= 1-Q, where P is the price and Q indicates the total quantity. Assume that companies compete with Cournot in choosing production levels. Assume that the game is repeated an infinite number of periods, that companies adopt trigger strategies and that the punishment is represented by Nash Reversion. 1)What is the value of the discount factor that allows companies to sustain tacit collusion in a balanced situation? 2) Assume now that companies are able to discover the defection of a rival company with K periods of delay. What do you think the effect on the sustainability of collusion can be? 3) Do you think that in this market collusion would be more easily sustainable if the companies compete with Bertrand? 4) If in a price-competitive market (Bertrand) N symmetrical companies operate, what would be the critical value of the discount factor that would…
11. Suppose there is a duopoly of two identical firms, A and B, facing a market inverse demand of P = 140 – 0.5Q, and cost functions of CA = 20QA and Cg = 20QB respectively. a. Find the Cournot-Nash equilibrium and profit for each firm. b. Suppose that A acts as the leader in a Stackelberg model and B responds. What are the respective quantities and profits of each firm now? Is it advantageous to move first? c. If the firms were able to collude, how much additional profit could they earn if they switch from simple single pricing to perfect price discrimination? d. Graph and label equilibria on the inverse demand.