PLEASE DO 14.6 by advertising intensity? Why?14.6. PRODUCT POSITIONING AND PRICE COMPETITION. Consider a duopoly where horizon-tal product differentiation is important. Firms first simultaneously choose their prod-uct locations, then simultaneously set prices in an infinite series of periods. Supposethat firms collude in prices in the second stage and anticipate they will do so at theproduct-positioning stage. In this context, what do you expect the degree of productdifferentiation to be?22would you expect them to be orderedCHALLENGING EXERCISES14.7. PRICE COMPETITION WITH SEARCH COSTS. Twenty-five different stores sell the sameproduct in a given area to a population of 2,000 consumers. Consumers are equallyfirst visit any of the 25 stores. Half of the consumers have no search costs andpurchase at the lowest price so long as it is lower than $45. The other half is willing tobuy one unit of the product up to a maximum of $70 and must incur a cost of $44 inorder to find out about the prices charged by other stores. Each store can sell up to 90units and has a unit cost of $25.(a) Show that, in equilibrium, there exist at most two different prices.(b) Show that, if there exist two different equilibrium prices, then the higherprice must be 70.els to am(c) Show that the following is an equilibrium: five firms set a price of 70 and theremaining 20 firms set a price of 45.

A duopoly is a market structure in which the majority of the market share for a specific good or…

14.6. PRODUCT POSITIONING AND PRICE COMPETITION. Consider a duopoly where horizon- tal product differentiation is important. Firms first simultaneously choose their prod- uct locations, then simultaneously set prices in an infinite series of periods. Suppose that firms collude in prices in the second stage and anticipate they will do so at the the degree of product product-positioning stage. In this context, what do you expect differentiation to be?22

14.6. PRODUCT POSITIONING AND PRICE COMPETITION. Consider a duopoly where horizon- tal product differentiation is important. Firms first simultaneously choose their prod- uct locations, then simultaneously set prices in an infinite series of periods. Suppose that firms collude in prices in the second stage and anticipate they will do so at the the degree of product product-positioning stage. In this context, what do you expect differentiation to be?22

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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