Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity g. Firms 2 and 3 observe Firm 1's choice, and then proceed to simultaneously choose q2 and g3, respectively. Market demand is given by p(Q) = 100 – Q. and Q = q1 + 2 + g3. Firm 1's costs are c (a) = lgı, firm 2's costs are c2(g2) = 6q2 and firm 3's costs are c3 (ga) = 6q3. Starting from the end of the game, you can express Firm 2's best response function in terms of g and g3. and you can similarly express Firm 3's best response function in terms of g and q2. Using these, answer the ollowing questions. a). If Firm 1 chooses gi = 6, what quantity will Firm 2 choose? 29.33 If Firm 1 chooses g = 100, what quantity will Firm 2 choose? E).. In the subgame perfect Nash equilibrium of this game, firm 1 produces what quantity? 27.25 x In the subgame perfect Nash equilibrium of this game, firm 2 and firm 3 each produce what quantity? 22.25 *

Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity g. Firms 2 and 3 observe Firm 1's choice, and then proceed to simultaneously choose q2 and g3, respectively. Market demand is given by p(Q) = 100 – Q. and Q = q1 + 2 + g3. Firm 1's costs are c (a) = lgı, firm 2's costs are c2(g2) = 6q2 and firm 3's costs are c3 (ga) = 6q3. Starting from the end of the game, you can express Firm 2's best response function in terms of g and g3. and you can similarly express Firm 3's best response function in terms of g and q2. Using these, answer the ollowing questions. a). If Firm 1 chooses gi = 6, what quantity will Firm 2 choose? 29.33 If Firm 1 chooses g = 100, what quantity will Firm 2 choose? E).. In the subgame perfect Nash equilibrium of this game, firm 1 produces what quantity? 27.25 x In the subgame perfect Nash equilibrium of this game, firm 2 and firm 3 each produce what quantity? 22.25 *

Survey of Economics (MindTap Course List)

9th Edition

ISBN:9781305260948

Author:Irvin B. Tucker

Publisher:Irvin B. Tucker

Chapter9: Monopolistic Competition And Oligoply

Section: Chapter Questions

Problem 20SQ

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