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(b) At the end of each period, the market ceases to exist with prob- ability y.

(b) At the end of each period, the market ceases to exist with prob- ability y.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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I need the answer of part b). Thank you.

(b) At the end of each period, the market ceases to exist with prob- ability y.
Transcribed Image Text:(b) At the end of each period, the market ceases to exist with prob- ability y.
Consider an infinitely repeated Bertrand oligopoly game with dis- count factor d < 1. The unit cost of production is a constant c = 0.2 and the same for all n > 2 firms. There are no fixed costs. Describe a form of "trigger" strategies that can facilitate tacit collu- sion in pricing. Determine the condition under which such strategies can sustain the monopoly price in each of the following cases: (a) The market demand in each period is D (p) = 1–p. (Calculate the monopoly price and profit explicitly in your answer.)
Transcribed Image Text:Consider an infinitely repeated Bertrand oligopoly game with dis- count factor d < 1. The unit cost of production is a constant c = 0.2 and the same for all n > 2 firms. There are no fixed costs. Describe a form of "trigger" strategies that can facilitate tacit collu- sion in pricing. Determine the condition under which such strategies can sustain the monopoly price in each of the following cases: (a) The market demand in each period is D (p) = 1–p. (Calculate the monopoly price and profit explicitly in your answer.)
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