Two firms produce and sell differentiated products that are substitutes for each other. Their demand curves are Firm 1: Q, 40-3P,+ P, Firm 2: Q, 40 - 3P,+ P, Bolh firms have constant marginal costs of $5.00 per unit. Both fims set their own price and take their competitor's price as fixed. Use the Nash equilibrium concept to determine the equiltbrium set of prices. Since Ihe firms ane identical, they wil set the same prices and produce the same quantitias. In equibrium, each firm will charge a price of $ and produce units of output. (Enter your responses rounded to wo decimal places)

Two firms produce and sell differentiated products that are substitutes for each other. Their demand curves are Firm 1: Q, 40-3P,+ P, Firm 2: Q, 40 - 3P,+ P, Bolh firms have constant marginal costs of $5.00 per unit. Both fims set their own price and take their competitor's price as fixed. Use the Nash equilibrium concept to determine the equiltbrium set of prices. Since Ihe firms ane identical, they wil set the same prices and produce the same quantitias. In equibrium, each firm will charge a price of $ and produce units of output. (Enter your responses rounded to wo decimal places)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Suppose that in the market for cell phone service the number of competitors has dwindled until D & C Romer Net and Spa T. Wireless have become the only providers left in the nation. Seeking to boost their profits, the two companies secretly agree to a coordinated increase in their prices for cell phone minutes. This practice is known as a Nash equilibrium. O tying. collusion. antitrust. predatory pricing.
2 firms are engaged in Cournot competition; firm A faces the cost curveCA(yA)=40yAand firm Bfaces the cost curveCB(yB)=40yB. The inverse market demand curve isP(y)=100y, whereyrepresents market level of output. a)Define the Cournot game. b)In 1 or 2 sentences explain why a firm has no incentive to deviate from the Cournot Nash equilibrium(holding their opponent’s strategy constant). c)Find the Cournot Nash Equilibrium. d)Now suppose instead of playing their strategies at the same time, firm A moves first and then firm B moves second(sequentialgame).Does firm A earn higher profits in this game or the game in part c)?
Please help me this is the completed question
Only typed answer
Please no written by hand and no image (Bertrand's duopoly game with discrete prices) Consider the variant of the example of Bertrand's duopoly game in this section in which each firm is restricted to choose a price that is an integral number of cents. Take the monetary unit to be a cent, and assume that c is an integer and a>c+!. Is (c,c) a nash equilibrium of this game? Is there any other nash equilibrium?
. OPEC, the Organization of Petroleum Exporting Countries, was founded in 1969. Their original objective was to form a cartel to increase the price that they receive for their oil exports. Create a prisoner’s dilemma type game for two large members of OPEC (e.g. Saudi Arabia and Indonesia). Create numbers, where payoffs are total annual oil export revenues for each of these two countries. Verbally explain how you got your numbers. Find the Nash equilibrium. Based on this model, what strategy is in the oil exporters’ best interest (Nash or otherwise)? How do they make it happen? Create another prisoner’s dilemmamodel for all of OPEC on one side, and all non OPEC oil exporting nations on the other side. Create numbers, where payoffs are total annual oil export revenues for each of the two sides. Verbally explain how you created your numbers. Also create your numbers applying the fact that OPEC’s total production capacity is greater than total non OPEC exports…
Consider the Bertrand pricing game from class. If both firms have identical marginal cost of $10 and consumers will purchase from whichever firm is cheapest as long as the price is under $50, what will be the Nash equilibrium? A B C D 50, 50 50, 10 10, 10 10,50
Two companies are the only Snowplow merchants in a small town. Inverse market demand curve is P 100- 10Q, where Q=ql + q2 (Firm l's output =q1; Firm 2's output = q2). Each firm has marginal costs of $25. In the Nash equilibrium in this market, the market price is $ O 50 O 40 25 60
At a busy intersection on Route 309 in Quakertown, Pennsylvania, the convenience store and gasoline station, Wawa, competes with the service and gasoline station, Fred's Sunoco. In the Nash-Bertrand equilibrium with product differentiation competition for gasoline sales, the demand for Wawa's gas is qw=740-400pw + 400ps and the demand for Fred's gas is as = 740-400ps + 400pw. Assume that the marginal cost of each gallon of gasoline is m = $6. The gasoline retailers simultaneously set their prices. What is the Bertrand-Nash equilibrium? The Bertrand-Nash equilibrium is where pw = $ 7.85 and Ps =$7.85. (Enter your responses rounded to two decimal places.) Suppose that for each gallon of gasoline sold, Wawa earns a profit of $1.00 from its sale of salty snacks to its gasoline customers. Fred sells no products that are related to the consumption of his gasoline. What is the Nash equilibrium? The Bertrand-Nash equilibrium is where Pw = $ and Ps = $ (Enter your responses rounded to…
Assume firms' marginal and average costs are constant and equal to c and that inverse market demand is given by P = a - bQ where a, b > 0. Suppose now the market is served by 2 firms (one leader, and one follower) that choose quantities for their identical products. Calculate: i. ii. iii. iv. The Nash equilibrium quantities for the Stackelberg duopolists Market output Market price Firm profit
Suppose that identical duopoly firms have constant marginal costs of $20 per unit. Firm 1 faces a 110-2p1 + P2, where q1 is Firm 1's output, p1 is Firm 1's price, and p2 is Firm 2's price. Similarly, the demand Firm 2 faces is 92 110-2p2 + p1. What is Firm 1's profit demand function of 9₁ under the Nash-Bertrand equilibrium, assuming no fixed costs? = =
Suppose that identical duopoly firms have constant marginal costs of $0 per unit. Firm 1 faces ademand function of q1 = 100 – 2p1 + p2, where q1 is Firm 1’s output, p1 is Firm 1’s price, and p2 isFirm 2’s price. Similarly, the demand Firm 2 faces is q2 = 100 – 2p2 + p1. Please solve for theBertrand equilibrium.