With the Firm Y response function Qy=600-1/2Qx and the Firm XX response function Qx=600-1/2Qy Imagine that firm X chooses their quantity first, then firm Y observes the quantity of firm X and chooses their own quantity. What quantities will they end up choosing? Is there a first or second-mover advantage here? [You may assume that firm X can only choose quantities that are multiples of 200. This prevents you from having to deal with prices that are not on the schedule. Also it means you've done all the busy work already--assuming you did the assignment last week.....and got it right. So this shouldn't require a lot of calculations, just a little thinking about how equilibrium works in a sequential-move game. Oh, and just give me the quantity for each firm, don't worry about giving me a complete strategy for firm Y.]
Use the photo at exercise 14 to solve the problem below
With the Firm Y response function Qy=600-1/2Qx
and the Firm XX response function Qx=600-1/2Qy
Imagine that firm X chooses their quantity first, then firm Y observes the quantity of firm X and chooses their own quantity. What quantities will they end up choosing? Is there a first or second-mover advantage here?
[You may assume that firm X can only choose quantities that are multiples of 200. This prevents you from having to deal with prices that are not on the schedule. Also it means you've done all the busy work already--assuming you did the assignment last week.....and got it right. So this shouldn't require a lot of calculations, just a little thinking about how equilibrium works in a sequential-move game. Oh, and just give me the quantity for each firm, don't worry about giving me a complete strategy for firm Y.]
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