Consider a Stackelberg game played by 3 firms: firm 1 moves first, then firm 2, and finally firm 3. Inverse demand is p = 11 - Q where Q = 91 +92 +93. All firms face the same constant marginal costs c = 1. Identify the SPE of this game.

Consider a Stackelberg game played by 3 firms: firm 1 moves first, then firm 2, and finally firm 3. Inverse demand is p = 11 - Q where Q = 91 +92 +93. All firms face the same constant marginal costs c = 1. Identify the SPE of this game.

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Chapter1: Making Economics Decisions

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Question

Consider a Stackelberg game played by 3 firms: firm 1 moves first, then firm 2, and finally firm 3.
Inverse demand is p = 11 – Q where Q = 91 +92 +93. All firms face the same constant
marginal costs c = = 1.
Identify the SPE of this game.
○ (2.5, 2.5, 2.5)
(10, 5, 2.5)
(10-22-22 10-4-23 10-4-42)
2
9
2
10-91
5, 2 9
10-91-92
2
10-91
5, 3
10-9₁1
3
O (5,2.5, 1.25)

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