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. %3D 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.)
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. %3D 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.)
Chapter15: Imperfect Competition
Section: Chapter Questions
Problem 15.6P
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![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.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F98098601-09d9-4b9f-bb1e-255af20edd0d%2F8c172a36-9c07-42da-a31f-a94803e2f8ef%2Fzd9u4w_processed.png&w=3840&q=75)
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.)
![(b) At the end of each period, the market ceases to exist with prob-
ability y.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F98098601-09d9-4b9f-bb1e-255af20edd0d%2F8c172a36-9c07-42da-a31f-a94803e2f8ef%2Ffeizek_processed.png&w=3840&q=75)
Transcribed Image Text:(b) At the end of each period, the market ceases to exist with prob-
ability y.
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