Duopolistic firms without cost compete on price with product differentiation. Demand for firm i is q₁ = 2 - 2p; + p;, where i is that individual firm and j is the other firm. a. Find the best response functions in the static game. (Be very careful since you'll keep using the best response functions.) b. Prices are nonnegative. Given this, do the first iteration of IESDS. c. Find the NE prices.
Duopolistic firms without cost compete on price with product differentiation. Demand for firm i is q₁ = 2 - 2p; + p;, where i is that individual firm and j is the other firm. a. Find the best response functions in the static game. (Be very careful since you'll keep using the best response functions.) b. Prices are nonnegative. Given this, do the first iteration of IESDS. c. Find the NE prices.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter13: best-practice Tactics: Game Theory
Section: Chapter Questions
Problem 1E
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