Problem 1. HHI in the Bertrand Triopoly EquilibriumIt's a Bertrand Triopoly - hence we know there are 3 firms in the industry-in-question, whocompetes in "price". The inverse demand functions for Firm 1, 2, and 3 are as follows:q1 = 40 - 1.5p1 +0.5p2 +p3q2 = 40 + 1.5p1 - 3p2+p3q3 = 40 + 2p1 + 1.5p2 - 4p3For each firm, the marginal cost of production is $2.50/unit produced and sold.Apparently, the firms' products are differentiated. You cannot impose symmetry across firms.Therefore, please solve each firm's profit maximization problem, impose equilibrium, and solvefor each firm's "action" in equilibrium. After that, please calculate the Herfindahl-Hirschman Index (HHI) in the industry in equilibrium.

q1=40-1.5P1+0.5P2+P3--- demand fucntion of firm 1q2=40+1.5P1-3P2+P3--- demand fucntion of firm…

It's a Bertrand Triopoly - hence we know there are 3 firms in the industry-in-question, who competes in "price". The inverse demand functions for Firm 1, 2, and 3 are as follows: q1 = 40 - 1.5p1 +0.5p2 +p3 q2 = 40 + 1.5p1 - 3p2 + p3 q3 = 40 + 2p1 + 1.5p2 - 4p3 For each firm, the marginal cost of production is $2.50/unit produced and sold.

It's a Bertrand Triopoly - hence we know there are 3 firms in the industry-in-question, who competes in "price". The inverse demand functions for Firm 1, 2, and 3 are as follows: q1 = 40 - 1.5p1 +0.5p2 +p3 q2 = 40 + 1.5p1 - 3p2 + p3 q3 = 40 + 2p1 + 1.5p2 - 4p3 For each firm, the marginal cost of production is $2.50/unit produced and sold.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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