(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, * cheat > collusion> 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 8 =0.9 8b) Same as 4a) but given 8 = 0.5e 8c) Stage Game is Cournot; Joe and Sarah have a constant MC - P(Q) = 20 – 0.1 × Q where Q = Qjoe + Qsarah and given 8 =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.

(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, * cheat > collusion> 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 8 =0.9 8b) Same as 4a) but given 8 = 0.5e 8c) Stage Game is Cournot; Joe and Sarah have a constant MC - P(Q) = 20 – 0.1 × Q where Q = Qjoe + Qsarah and given 8 =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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

only typed solution
Space 1 options: less than or equal to, equal to, greater than or equal to Space 2 options: 0 0.5 1 8 16
Assume the following scenarios. First, identify their nature of the situation (that is, which type of game and situation is implied) and second, discuss each one of them in terms of outcomes and possible solutions. (a) A cartel has a collective interest in restricting output to earn a monopoly profit. At the same time, cartel members can increase their individual profits by cheating on the cartel, that is, exceeding their quotas. (b) Abnormally cold winter temperatures bring the threat of a shortage of natural gas for heating buildings and homes.
I am struggling with this question for a Game Theory course. It would be great to have a visual breakdown of how to solve it so that I understand what to do for the rest of the problems.
Two rival companies competing in the same market need to decide their plans for future expansion of their stores. The Table below shows the possible outcomes of their mutually interdependent actions (payoffs are profits in £m) Giga Company Titanic Conglomerate No Change Refurbishment of existing stores Large Expansion No Change 30, 40 25, 35 15, 24 Refurbishment of existing stores 35, 30 28, 32 18, 33 Large Expansion 12, 22 18, 20 20, 25 The Nash equilibrium: (A) does not exist. (B) occurs when both firms choose Refurbishment of existing stores. (C) occurs when both firms choose Large Expansion. (D) occurs when both firms choose No Change.
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.)
Please help with #4- A and B