Nash The total cost for a product-testing firm is C(q)=70+ 20q² q= number of products tested Price of a product = average cost Each corporation purchases one product test per year from a product-testing firm in the same city. All other inputs are ubiquitous. Suppose five corporations are initially distributed uniformly, with one corporation in each city (A,B,C,D,E). Describe the Nash equilibrium in terms of: How many firms will cluster together? How much will those firms pay for the test?
Nash The total cost for a product-testing firm is C(q)=70+ 20q² q= number of products tested Price of a product = average cost Each corporation purchases one product test per year from a product-testing firm in the same city. All other inputs are ubiquitous. Suppose five corporations are initially distributed uniformly, with one corporation in each city (A,B,C,D,E). Describe the Nash equilibrium in terms of: How many firms will cluster together? How much will those firms pay for the test?
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Transcribed Image Text:Nash Equilibrium Cluster Size
The total cost for a product-testing firm is
C(q)=70+ 20q²
q= number of products tested
Price of a product = average cost
Each corporation purchases one product test per year from a product-testing firm in the same
city. All other inputs are ubiquitous.
Suppose five corporations are initially distributed uniformly, with one corporation in each city
(A,B,C,D,E).
Describe the Nash equilibrium in terms of:
How many firms will cluster together?
How much will those firms pay for the test?
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