Exercise 1 In a market N22 firms compete by choosing prices simultaneously. The marginal cost equals zero for both firms. The inverse demand function is Plg) = 1-q if qsland Pq) = 0 if q > 1. When firms have the same price they split the market in halves. All firms have a discount factor ô e (0,1). Question 1 Assume firms compete for a finite number of periods. Find equilibrium prices and profits. Calculate the social welfare. p= 1/2; q = 1/2; x = 1/2; W= 3/4; p= 0; q = 1; z = 0; W=1/2; O p= 1/4; q = 3/4; z = 1/2; W= 13/16; All the other solutions are wrong.

Exercise 1 In a market N22 firms compete by choosing prices simultaneously. The marginal cost equals zero for both firms. The inverse demand function is Plg) = 1-q if qsland Pq) = 0 if q > 1. When firms have the same price they split the market in halves. All firms have a discount factor ô e (0,1). Question 1 Assume firms compete for a finite number of periods. Find equilibrium prices and profits. Calculate the social welfare. p= 1/2; q = 1/2; x = 1/2; W= 3/4; p= 0; q = 1; z = 0; W=1/2; O p= 1/4; q = 3/4; z = 1/2; W= 13/16; All the other solutions are wrong.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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