Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity q. Firms 2 and 3 observe Firm 1's choice, and then proceed to simultaneously choose q; and q, respectively. Market demand is given by PO) = 100 - 0, and Q= q +9: +4. Firm t's costs are c, (q) = 341. ferm 2's costs are cy(q,) = 30; and firm 3's costs are Starting from the end of the game, you can express Firm 2's best response function in terms of q and g, and you can similarly express Firm 3's best response function in terms of q and q. Using these, answer the following questions. a) Firm 1 chooses q = 9, what quantity will Firm 2 choose? b) f Firm 1 chooses qi = 100, what quantity wil Firm 2 choose? e) in the subgame perfect Nash equilibrium of this game, firm 1 produces what quantity? d) in the subgame perfect Nash equilibrium of this game, firm 2 and ferm 3 each produce what quantity?
Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity q. Firms 2 and 3 observe Firm 1's choice, and then proceed to simultaneously choose q; and q, respectively. Market demand is given by PO) = 100 - 0, and Q= q +9: +4. Firm t's costs are c, (q) = 341. ferm 2's costs are cy(q,) = 30; and firm 3's costs are Starting from the end of the game, you can express Firm 2's best response function in terms of q and g, and you can similarly express Firm 3's best response function in terms of q and q. Using these, answer the following questions. a) Firm 1 chooses q = 9, what quantity will Firm 2 choose? b) f Firm 1 chooses qi = 100, what quantity wil Firm 2 choose? e) in the subgame perfect Nash equilibrium of this game, firm 1 produces what quantity? d) in the subgame perfect Nash equilibrium of this game, firm 2 and ferm 3 each produce what quantity?
Chapter1: Making Economics Decisions
Section: Chapter Questions
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![Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity q. Firms 2 and 3 observe Firm 1's choice, and then proceed to simultaneously
choose q2 and q1, respectively.
Market demand is given by p(O) = 100 – Q, and Q = q1 + 42 + 41. Firm 1's costs are c, (41) = 34, firm 2's costs are cz(4,) = 34; and firm 3's costs are
cs(qs) = 3q,.
Starting from the end of the game, you can express Firm 2's best response function in terms of q and q3, and you can similarly express Firm 3's best response
function in terms of qi and q2. Using these, answer the following questions.
a) If Firm 1 chooses q1 = 9, what quantity will Firm 2 choose?
b) If Firm 1 chooses qi = 100, what quantity will Firm 2 choose?
c) in the subgame perfect Nash equilibrium of this game, firm 1 produces what quantity?
d) In the subgame perfect Nash equilibrium of this game, firm 2 and firm 3 each produce what quantity?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe64bd7f0-ad53-4ec3-b1f2-12f642dcb6b8%2F851c567f-319d-426a-a160-6ae4b355f04a%2Fm906s3_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity q. Firms 2 and 3 observe Firm 1's choice, and then proceed to simultaneously
choose q2 and q1, respectively.
Market demand is given by p(O) = 100 – Q, and Q = q1 + 42 + 41. Firm 1's costs are c, (41) = 34, firm 2's costs are cz(4,) = 34; and firm 3's costs are
cs(qs) = 3q,.
Starting from the end of the game, you can express Firm 2's best response function in terms of q and q3, and you can similarly express Firm 3's best response
function in terms of qi and q2. Using these, answer the following questions.
a) If Firm 1 chooses q1 = 9, what quantity will Firm 2 choose?
b) If Firm 1 chooses qi = 100, what quantity will Firm 2 choose?
c) in the subgame perfect Nash equilibrium of this game, firm 1 produces what quantity?
d) In the subgame perfect Nash equilibrium of this game, firm 2 and firm 3 each produce what quantity?
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