Discrete Bertrand Game Consider the discrete version of the Bertrand game discussed in class. Two firms, 1 and 2, are producing the same identical product with the constant marginal cost of Firms compete in prices; Firm 1 chooses price p₁, and Firm 2 chooses price p2. Given p₁ and p2, the individual demands of firms are: 91 (P1, P2) 20-2 P1 Pi< P2 P1 P2 P1 = P2 c = 4. 0 20-2 PL 92 (P1, P2) 0 P2 P1 20-2 P2 P1 P2 20-2p2 2 P1 = P2
Discrete Bertrand Game Consider the discrete version of the Bertrand game discussed in class. Two firms, 1 and 2, are producing the same identical product with the constant marginal cost of Firms compete in prices; Firm 1 chooses price p₁, and Firm 2 chooses price p2. Given p₁ and p2, the individual demands of firms are: 91 (P1, P2) 20-2 P1 Pi< P2 P1 P2 P1 = P2 c = 4. 0 20-2 PL 92 (P1, P2) 0 P2 P1 20-2 P2 P1 P2 20-2p2 2 P1 = P2
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
B1
![Discrete Bertrand Game
Consider the discrete version of the Bertrand game discussed in class.
Two firms, 1 and 2, are producing the same identical product with the
constant marginal cost of
c = 4.
Firms compete in prices; Firm 1 chooses price p1, and Firm 2 chooses
price p2. Given p1 and p2, the individual demands of firms are:
20 2 p1 Pi < P2
0.
P1< P2
9(P1. P2)
42(P1. P2)
20 - 2 p2 Pi > P2
20 -2 P2
Pi > P2
%3D
%3D
20- 2 p1
Pi = P2
P1 = P2
2](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8d9fcceb-ac1f-45e7-8047-04d0694ebcd6%2Fe2fd8ebf-f9cd-43a0-97f6-e66431bf4c89%2Fg75slxm_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Discrete Bertrand Game
Consider the discrete version of the Bertrand game discussed in class.
Two firms, 1 and 2, are producing the same identical product with the
constant marginal cost of
c = 4.
Firms compete in prices; Firm 1 chooses price p1, and Firm 2 chooses
price p2. Given p1 and p2, the individual demands of firms are:
20 2 p1 Pi < P2
0.
P1< P2
9(P1. P2)
42(P1. P2)
20 - 2 p2 Pi > P2
20 -2 P2
Pi > P2
%3D
%3D
20- 2 p1
Pi = P2
P1 = P2
2
![Strategy profile (p1, P2) = (6, 6) forms a Nash equilibrium of this
%3D
game.
True
O False](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8d9fcceb-ac1f-45e7-8047-04d0694ebcd6%2Fe2fd8ebf-f9cd-43a0-97f6-e66431bf4c89%2F3w0k11d_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Strategy profile (p1, P2) = (6, 6) forms a Nash equilibrium of this
%3D
game.
True
O False
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