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(8) For each situation, solve whether collusion is sustainable using "trigger strategy" (infinitely repeated) NOTE: For each of these exercises, you need to calculate { T collusion » T cheat » punished } and see if the incentive compatibility inequality (condition for collusion to occur as a Nash equilibrium) is satisfied. 8a) Stage Game is Bertrand with Homogeneous Product; cost same as before but overall demand is Q(P) = 375 – 15 P and given & = 0.9 8b) Same as 4a) but given & = 0.5 8c) Stage Game is Cournot; Joe and Sarah have a constant MC P(Q) = 20 – 0.1 × Q where Q = Qjoe + Qsarah and given & = 0.9

(8) For each situation, solve whether collusion is sustainable using "trigger strategy" (infinitely repeated) NOTE: For each of these exercises, you need to calculate { T collusion » T cheat » punished } and see if the incentive compatibility inequality (condition for collusion to occur as a Nash equilibrium) is satisfied. 8a) Stage Game is Bertrand with Homogeneous Product; cost same as before but overall demand is Q(P) = 375 – 15 P and given & = 0.9 8b) Same as 4a) but given & = 0.5 8c) Stage Game is Cournot; Joe and Sarah have a constant MC P(Q) = 20 – 0.1 × Q where Q = Qjoe + Qsarah and given & = 0.9

Advanced Engineering Mathematics
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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(8) For each situation, solve whether collusion is sustainable using "trigger strategy" (infinitely repeated) NOTE: For each of these exercises, you need to calculate { t collusion > ´cheat> punished } and see if the incentive compatibility inequality (condition for collusion to occur as a Nash equilibrium) is satisfied. 8a) Stage Game is Bertrand with Homogeneous Product; cost same as before but overall demand is Q(P) = 375 – 15 P and given & = 0.9 8b) Same as 4a) but given 8 = 0.5 8c) Stage Game is Cournot; Joe and Sarah have a constant MC P(Q) = 20 – 0.1 × Q where Q = Qjoe + Qsarah and given & = 0.9 8d) Same as 4c) above but given 8 = 0.5 8e) Try 4c) and 4d) assuming Sarah's MC = $5 but Joe's MC = $8. They both collude on Sarah's Monopoly Output.
Transcribed Image Text:(8) For each situation, solve whether collusion is sustainable using "trigger strategy" (infinitely repeated) NOTE: For each of these exercises, you need to calculate { t collusion > ´cheat> punished } and see if the incentive compatibility inequality (condition for collusion to occur as a Nash equilibrium) is satisfied. 8a) Stage Game is Bertrand with Homogeneous Product; cost same as before but overall demand is Q(P) = 375 – 15 P and given & = 0.9 8b) Same as 4a) but given 8 = 0.5 8c) Stage Game is Cournot; Joe and Sarah have a constant MC P(Q) = 20 – 0.1 × Q where Q = Qjoe + Qsarah and given & = 0.9 8d) Same as 4c) above but given 8 = 0.5 8e) Try 4c) and 4d) assuming Sarah's MC = $5 but Joe's MC = $8. They both collude on Sarah's Monopoly Output.
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