(Use for Questions 4-6): The Ulysses Corporation and the Xenophon Company are the only producers of a sophisticated type of camera. They each can engage in either a high or a lowlevel of advertising in trade journals. The payoff matrix (profit in millions of dollars) is as follows:Xenophon CompanyHigh LevelLow LevelХ, S13мU, $12MХ, $12MU, $11MLow LevelUlysses CorpХ, $11MU, $12MX, $12MU, $13MHigh LevelWhat will be the profit of each firm?а.Xenophon Low Level, Ulysses Low Level: X, $13M and U, $12MXenophon High Level, Ulysses Low Level: X, $12M and U, $11MC. Xenophon Low Level, Ulysses High Level: X, $12M and U, $13MO d.X, $11M and U, $12MXenophon High Level, Ulysses High Level:

The payoff matrix shows the different level of profit earn by different firms from every combination…

Answered: (Use for Questions 4-6): The Ulysses…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider a Stackelberg game played by 3 firms: firm 1 moves first, then firm 2, and finally firm 3. Inverse demand is p = 11 – Q where Q = 91 +92 +93. All firms face the same constant marginal costs c = = 1. Identify the SPE of this game. ○ (2.5, 2.5, 2.5) (10, 5, 2.5) (10-22-22 10-4-23 10-4-42) 2 9 2 10-91 5, 2 9 10-91-92 2 10-91 5, 3 10-9₁1 3 O (5,2.5, 1.25)
iii) Consider the following game Safaricom Airtel High price Medium price Low price High price Medium price Low price a) Determine the Nash equilibrium ( - -- 1,1 0,0 2,-1 4,3 1,2 0,4 1,0 0,1 3,2 b) Represent the game sequentially and determine the sub-game perfect equilibrium assuming Safaricom is the first mover
3. Consider a two-stage game of R&D competition. The players are firm i and j, each produces with different marginal cost c₁ and cj, where i, j = 1, 2 and i ‡ j. The rules are the firms first invest, denoted by I, and I,, in cost-reducing innovation, they then engage in Cournot competition in the output market by deciding qk, k = i, j and i j simultaneously. The payoffs to the firms are their profits. (a) write out the objective function for firm i and j at the R&D stage and that at the output stage. (b) Assuming that p'(Q) 0 and 1 p"Q+3p' (c) dvi dli < 0. C əqi aci - p"qj+2pi p'(p"Q+3p') даі acj = p"qi+p' p' (p"Q+3p') aQ aci - show, in the R&D stage, that the first-order conditions are = [p' (Q (C₁, c₁)) a daj(crcj) — 1] qi (C₁, Cj) = qp² (Ii, 1, č¡, ēj) = 0. And aci Ij=constant (d) In a closed economy, show that the total differentiation of the national welfare function is dw = −p' (qidqi+q;dqj) — q₁dc₁ — q¡dc; – dl; – dlj. - -
You are a manager in a market composed of eight firms, each of which has a 12.5% market share. The premerger Herfindahl-Hirschman index (HHI) for this market equals If any two of these firms merge, the post-merger HHI equals Based on this information and the Horizontal Merger Guidelines described in this course, which of the following statements is true? A. A merger like this leads to an unconcentrated market and is typically permitted. B. A merger like this leads to a moderately concentrated market and potentially raises antitrust concerns. C. A merger like this leads to a highly concentrated market and potentially raises antitrust concerns. D. A merger like this leads to a highly concentrated market, is presumed to enhance market power, and will almost certainly be blocked. E. Other/None of the above/Not enough information provided. O
(a) Suppose Fiat recently entered into an Agreement and Plan of Merger with Case for $4.3 billion. Prior to the merger, the market for four-wheel-drive tractors consisted of five firms. The market was highly concentrated, with a Herfindahl- Hirschman index of 2,765. Case's share of that market was 22 percent, while Fiat comprised just 12 percent of the market. If approved, by how much would the postmerger Herfindahl-Hirschman index increase?
I was hoping I could have some help on parts c-e of this problem I’m getting a little stuck on making sure my values are correct given this this is a cournot duopoly model.
The pricing strategies of MTN and Vodacom are shown in the table below. They must decide whether to charge a high or low price for their internet service. The four pairs of payoff values represent what each company expects to earn or lose in millions of rands, depending on the pricing strategy chosen by the other company. Vodacom's Price Strategy MTN's Price Strategy High Price Low Price High Price Vodacom +R200 200 Vodacom-R100 MTN +R500. Low Price a) Vodacom will charge a low price; MTN will charge a high price. b) Vodacom will charge a high price; MTN will charge a low price.. c) Both Vodacom and MTN will charge a low price. d) Both Vodacom and MTN will charge a high price. Vodacom +R500 MTN-R100 Vodacom+R100 MTN+R100 If it's expected that the incomes of people living in rural South Africa is expected to increase, what will the equilibrium outcome be, ceteris paribus?
D2) Explain this concept and give one practical example(oligopoly)
8)Consider a market in which 5 companies operate, whose marginal and average costs are equal to c. The demand function is given by P(Q)= 1-Q, where P is the price and Q indicates the total quantity. Assume that companies compete with Cournot in choosing production levels. Assume that the game is repeated an infinite number of periods, that companies adopt trigger strategies and that the punishment is represented by Nash Reversion. 1)What is the value of the discount factor that allows companies to sustain tacit collusion in a balanced situation? 2) Assume now that companies are able to discover the defection of a rival company with K periods of delay. What do you think the effect on the sustainability of collusion can be? 3) Do you think that in this market collusion would be more easily sustainable if the companies compete with Bertrand? 4) If in a price-competitive market (Bertrand) N symmetrical companies operate, what would be the critical value of the discount factor that would…
The table below shows market share data for different firms producing desks. Market Share in % 15 18 7 11 6 10 4 5 5 16 Firm Aardvark Inc Baluga, LLC Cran Inc Delta Co Echo Co Farriss Co Gum Drop Inc Hill Corp Indigo Corp Jackson Co What is the Herfindahl Hirschman Index (HHI) for this market? ← HHI 225 324 49 121 36 100 16 25 25 256 Suppose that Delta Co and Gum Drop Inc are considering a merger. What will the HHI be after this merger?
11. Suppose there is a duopoly of two identical firms, A and B, facing a market inverse demand of P = 140 – 0.5Q, and cost functions of CA = 20QA and Cg = 20QB respectively. a. Find the Cournot-Nash equilibrium and profit for each firm. b. Suppose that A acts as the leader in a Stackelberg model and B responds. What are the respective quantities and profits of each firm now? Is it advantageous to move first? c. If the firms were able to collude, how much additional profit could they earn if they switch from simple single pricing to perfect price discrimination? d. Graph and label equilibria on the inverse demand.
(Game Theory question)Two firms are price- competing as in the standard Bertrand model. Each faces the market demandfunctionD(p) = 1000-p. Firm 1 has constant marginal cost c1= 200, while firm 2 has the constantmarginal cost c2= 400. If one of the firms has the lower price, they capture the entire market, likethe standard model. However, when they charge exactly the same price, firm 2 gets 75 percent of thedemand, firm 1 gets the remaining quarter. Q1: Write out the best-response correspondences B1(p2) and B2(p1) as functions of p2 and p1 respectively. Q2: Is there an equilibrium for this game as defined?

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