Consider a variant of the Bertrand's competition given in class. Assume that each firm is restricted to choose a price that is an integral number of cents. Take the monetary unit to be cent and assume that c is an integer and a > c+1. Is (c, c) a Nash equilibrium? Is there any other Nash equilibrium? Plz do fast
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- 1. Find all subgame perfect nash equilibrium 2. Find a nash equilibrium that is not SPNE, and explain why it is not an SPNE.Under Bertrand competition, O the Nash equilibrium is marginal cost pricing (the perfectly competitive outcome) O the Nash eqt Nibrium is monopoly pricing there are multiple Nash equilibria O there is no set of strategies that lead to a Nash equilibriumFrom the bank of terms match the letter that corresponds to the appropriate concept/description. Bank of terms Letter A Perfect Bayesian Nash equilibrium Bayesian Nash equilibrium Nash equilibrium Competition à la Cournot Competition à la Bertrand В C E Herfindahl index F Perfect competition G Consumer urplus Lerner index H I Principal-agent model Natural monopoly Strategic complements Conjectural variations approach Strategic substitutes J K L M N Concept/description Competition in quantities Price taking behavior Index of maket power Write letter Measure of welfare Solution for a static game with incomplete information Competition in prices Measure of intensity of competition Manager and business owner work relationship Best response functions that slope upwards Estimation of market power
- Consider three firms producing the same good in a market competing a la Bertrand. They face an inverse demand function Q(p) = 10 – P Which of the following is FALSE? For these problems assume no firm has a fixed cost. A If each firm's marginal cost is $5, the equilibrium price paid by consumers is 5. B If a firm leaves the market and their marginal cost is higher than the Nash Equilibrium Price, the Nash Equilibrium will not change.10 logging firms use a forest to collect timber. Each firm i must choose how many trees to cut, gj The benefit of cutting a tree is 1000 -2G per tree, where G is the total quantity of trees cut in the forest. The marginal cost of cutting a tree is 10G. Firms do not face any fixed costs. In a Nash Equilibrium, O Each firm cuts 125 trees O Each firm cuts 125/10 trees O Each firm cuts 125/4 trees O Each firm cuts 5 treesfnan421 Word Gözden Geçir Görünüm Varam V Ne yapmak isted ginzi soyieyin 2) Two firms, X and Y, are planning to market their new products. Each firm can develop TV, Laptop. Market research indicates that the resulting profits to each firm for the alternative strategies are given by the following payoff matrix: FIRM Y TV LAPTOP PHONE FIRM X TV 30, 30 50, 35 20, 50 LAPTOP 40,70 20, 20 50,80 PHONE 50,20 80,50 10,10 A) Find the Nash equilibria for this game, assuming that both firms make their decisions at the same time. (explain the decision step by step)i B) If each firm is risk averse and uses a maximin strategy, what will be the resulting equilibrium? (explain the decision step by step);
- a)Find the Nash equilibrium b)Find subgame Nash equilibrium c) Explain why all Nash equilibrium are not subgame perfect. Please see the image The term in image are A,B b,c and w,a and 1,2,7,9 and 7,3,4,8fnan421 Word Gozden Geçir Górunum Vard m e vaomak sted nz sOv eyin 1) Two firms, X and Y, are planning to market their new products. Each firm can develop either TV or Laptop. Market research indicates that the resulting profits to each firm for the alternative strategies are given by the following payoff matrix: FIRM Y TV LAPTOP FIRM X TV 30, 30 20, 35 LAPTOP 40,70 20, 20 A) What is the cooperative outcome? B) Which firm benefits most from the cooperative outcome? How much would that firm need to offer the other?Consider trade relations between the United States and Mexico. Assume that the leaders of the two countries believe the payoffs to alternative trade policies are as follows a. What is the dominant strategy for the United States? For Mexico? Explain. b. Define Nash equilibrium. What is the Nash equilibrium for trade policy? c. In 1993, the U.S.Congress ratified the North American Free Trade Agreement, in which the United States and Mexico agreed to reduce trade barriers simultaneously. Do the perceived payoffs shown here justify this approach to trade policy? Explain. d. Based on your understanding of the gains from trade (discussed in Chapters 3 and 9), do you think that these payoffs actually reflect a nation's welfare under the four possible outcomes?
- Kate and Alice are small-town ready-mix concrete duopolints. The market demand tunction is o- 20,000 - 200Pwhere Pis the price of a cubic yard of concrete and Ois the number of cubic yards demanded per year. Marginal cost is sa0 per cubic yard. Suppose Kate onters the market first and chooses her output belore Alice. What is the difference in Alice's profit when Kata enters the market tirst, compared to when they simultanecusly select ther outputa? When Kate entors the markat first, Alice's profit is $3,888.a0 lower. O When Kate enters the market fest, Alice's profit is 513,333.33 lower. O When Kate enters the market first, Alice's profit is $5,000 lower. O When Kate onters the market first, Alice's proft is $1.111.11 higher,1) What are the Nash equilibria? Which one is unreasonable/non-credible threat? 2) What are the subgame perfect Nash equilibria? Does SPNE concept eliminate the unreasonable Nash equilibrium?Explain the meaning of Nash equilibrium when firms are competing with respect to price. Why is the equilibrium stable? Why don’t hey raise prices to maximize joint profits?
