(Qjoe + Qsarah)- Joe has a constant marginal cost of $10, known to both- Joe's expectation about Sarah's constant marginal cost is: 12 with probability 0.6 C2 = {- 8 with probability 0.4 Question 1(a): Solve for the above Cournot-Nash equilibrium with asymmetric information with Sarah as a high cost supplier (C2 = 12 . unknown to Joe) %3D Question 1(b): Solve for the above Cournot-Nash equilibrium with asymmetric information with Sarah as a low cost supplier (C2 = 8 ... unknown to Joe) Question 1(c): Solve for the above Cournot-Nash equilibrium with complete information with Sarah as a high cost supplier (C2 = 12 ... known to Joe)
(Qjoe + Qsarah)- Joe has a constant marginal cost of $10, known to both- Joe's expectation about Sarah's constant marginal cost is: 12 with probability 0.6 C2 = {- 8 with probability 0.4 Question 1(a): Solve for the above Cournot-Nash equilibrium with asymmetric information with Sarah as a high cost supplier (C2 = 12 . unknown to Joe) %3D Question 1(b): Solve for the above Cournot-Nash equilibrium with asymmetric information with Sarah as a low cost supplier (C2 = 8 ... unknown to Joe) Question 1(c): Solve for the above Cournot-Nash equilibrium with complete information with Sarah as a high cost supplier (C2 = 12 ... known to Joe)
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter17: Making Decisions With Uncertainty
Section: Chapter Questions
Problem 17.5IP
Related questions
Question
Q.3
![1) Cournot Model with Asymmetric Information- Suppose the inverse demand function is P(Q) = 30 – 0.2 ×
(Qjoe + Qsarah)- Joe has a constant marginal cost of $10, known to both- Joe's expectation about Sarah's
constant marginal cost is:
12 with probability 0.6
C2 = {-
8 with probability 0.4
Question 1(a): Solve for the above Cournot-Nash equilibrium with asymmetric information with Sarah as a
high cost supplier (C2 = 12 ... unknown to Joe)
%3D
Question 1(b): Solve for the above Cournot-Nash equilibrium with asymmetric information with Sarah as a
low cost supplier (C2 = 8 ... unknown to Joe)
Question 1(c): Solve for the above Cournot-Nash equilibrium with complete information with Sarah as a
high cost supplier (C2 = 12 ... known to Joe)
Question 1(d): Solve for the above Cournot-Nash equilibrium with complete information with Sarah as a
low cost supplier (C2 = 8) .. known to Joe)
%3D
Question 1(e): If Sarah is a low cost supplier, what is the maximum she would be willing to spend to
convince Joe of her cost?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc9da1ded-16b4-42f1-baf0-f9a189d27608%2Fee176c44-a83d-4e85-b046-d853b86a9490%2Fnuhaau9_processed.jpeg&w=3840&q=75)
Transcribed Image Text:1) Cournot Model with Asymmetric Information- Suppose the inverse demand function is P(Q) = 30 – 0.2 ×
(Qjoe + Qsarah)- Joe has a constant marginal cost of $10, known to both- Joe's expectation about Sarah's
constant marginal cost is:
12 with probability 0.6
C2 = {-
8 with probability 0.4
Question 1(a): Solve for the above Cournot-Nash equilibrium with asymmetric information with Sarah as a
high cost supplier (C2 = 12 ... unknown to Joe)
%3D
Question 1(b): Solve for the above Cournot-Nash equilibrium with asymmetric information with Sarah as a
low cost supplier (C2 = 8 ... unknown to Joe)
Question 1(c): Solve for the above Cournot-Nash equilibrium with complete information with Sarah as a
high cost supplier (C2 = 12 ... known to Joe)
Question 1(d): Solve for the above Cournot-Nash equilibrium with complete information with Sarah as a
low cost supplier (C2 = 8) .. known to Joe)
%3D
Question 1(e): If Sarah is a low cost supplier, what is the maximum she would be willing to spend to
convince Joe of her cost?
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