E22225(5a + 2c)²2(19a - 26c)²225115682225(5a + 2c)²112 (5a-7c)²2225(5a --7c)²The Nash equilibrium in stage 1 for firm 1 isthat firmis the leader and firmBlank # 1Blank # 2Blank # 3Blank # 4E1L1L2778411568(5a + 2c)²(5a - 7c)²(19a +7c)²-AA/and for firm 2 isis the follower.----'This means Consider a duopoly that compete with prices in a given market (parameter a>0measures the market size) with two horizontally differentiated products. Firm 1 is theefficient firm with zero marginal cost while firm 2 is less efficient and has marginalcost c>0. Suppose a>c>(3/4)a>0. The two firms compete in prices in a second stagelike in a Bertrand model with differentiated products. In a first stage firms choosesimultaneously whether to play "early" denoted E or to play "late" denoted L. If theyboth make the same choice (either E or L), a simultaneous Bertrand game followswhile if they make different choices, a sequential game follows with the firm havingchosen E being the leader. The second stage subgame equilibrium profits arereported in the normal form first stage game below where the top payoff in any cellcorresponds to the payoff of the row player (firm 1) while the bottom corresponds tothe column player (firm 2). E1 and L1 correspond to the choices for Firm1 while E2and L2 correspond to the choices for Firm 2.

A simultaneous game is a type of strategic interaction in game theory where all players make their…

The Nash equilibrium in stage 1 for firm 1 is _____and for firm 2 is that firm is the leader and firm is the follower. Blank # 1 Blank # 2 ___. This means

The Nash equilibrium in stage 1 for firm 1 is ___and for firm 2 is that firm is the leader and firm is the follower. Blank # 1 Blank # 2 _. This means

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.4P

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If firm 1 and firm 2 are the oligopolistic firms in bottled spring water production in Nomansland. The market demand is given by ? = 5000 −20?, Qd is the number of kilolitres demanded per month while P is the price of kilolitres of bottled water. The marginal cost of a kilolitre of bottled water is R10.How do I Find the Cournot equilibrium quantities and price? and how do I Find the Cournot profits and the monopolist profits?
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