7. Acura and Volvo offer warranties on their automobiles, where wA and we are the numbers of years of an Acura and Volvo warranty, respectively. The revenue for Firm i, i = A for Acura and V for Volvo, is 27000 w₁/(WA+Wv). Its cost of providing the warranty is C₁ = 2000 w₁. Acura and Volvo participate in a warranty-setting game in which they simultaneously set warranties. Calculate the Nash equilibrium warranties.

7. Acura and Volvo offer warranties on their automobiles, where wA and we are the numbers of years of an Acura and Volvo warranty, respectively. The revenue for Firm i, i = A for Acura and V for Volvo, is 27000 w₁/(WA+Wv). Its cost of providing the warranty is C₁ = 2000 w₁. Acura and Volvo participate in a warranty-setting game in which they simultaneously set warranties. Calculate the Nash equilibrium warranties.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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