Consider a Stackelberg duopoly with the demand function p=10-Q where Q=q +q,. Firms 1 and 2 have marginal costs of c and c, respectively. a) What is a strategy for firm 2 in this setting? b) Find firm 2's best-response function. c) Given firm 2's best-response function, find the Subgame Perfect Equilibrium strategy profile.
Q: Consider the same Stackelberg game with three firms as described by the previous question. Firm 1…
A: In a Stackelberg competition with n number of firms, one firm acts as the leader with the remainder…
Q: Both firms in a Cournot duopoly would enjoy higher profits if: each firm simultaneously…
A: Cournot duopoly refers to the market structure where only two firms are competing with each other to…
Q: The two conflicting tendencies that a firm has in an oligopolistic industry are the incentive to…
A: Oligopolist is a market structure in which there are few sellers in the market. The supply of the…
Q: If a firm operates within an oligopoly and expl demand curve, increasing price will result in…
A: An oligopoly is a market structure where a small number of firms dominate the market. The prices are…
Q: Table B Pricing Matrix shows the pricing options for two mechanics, Angela and Tom, operating in an…
A: A pricing strategy methodology is a model or technique used to layout the best price for an item or…
Q: Two firms operating under oligopoly are faced with two choices, to charge a high price or a low…
A: a) In the oligopoly, there are two firms, Firm 1 and Firm 2. Both firms have two choices to charge a…
Q: Consider a market dominated by two firms with identical cost functions C(q) = c*q for some constant…
A: In Bertrand competition firms compete in prices rather than quantities . Cost function : C(q) = c*q…
Q: Sometimes oligopolies in the same industry are very different in size. Suppose we have a duopoly…
A: Oligopoly is an imperfect market competition, where there are few firms selling differentiated goods…
Q: Two firms compete in a market to sell a standardized product and the inverse demand in the market is…
A: Given: P = 400 – Q where Q = Q1 + Q2.
Q: The market demand curve faced by Stackelerg duopolies is: Qd = 12,000 - 5P where Qd is the market…
A: Market demand = 12000 – 5P 5P = 12000 – Q d And Q d = qA + qB 5 P = 12000 – qA – qB P = 2400 – 0.2qA…
Q: In an oligopoly market, long-term profits are always zero can remain positive due to multiple types…
A: Oligopoly market has few firms selling the identical or differentiated products. There is high…
Q: Consider a Cournot oligopoly with two firms, where the demand curves are given by P, = 100- Q1 - 2Q2…
A: Given, Cournot oligopoly demand functions of two firms : Firm 1 : P1= 100 - Q1 - 2Q2 Firm 2 : P2=…
Q: Consider a Cournot oligopoly with three firms i = 1; 2; 3. All firms have the same constant marginal…
A:
Q: Kaiser High price Low price Alcoa A High price $400, $500 с $525, $200 B Low price $175, $575 D…
A: Alcoa and Kaiser have been cooperating for the past two months - both have been setting high prices,…
Q: Alcoa and Kaiser, duopolists in the market for primary aluminum ingot, choose prices of their 500…
A: According to the table below: When Alcoa and Kaiser were cooperating, both were settling a high…
Q: Cournot duopoly game. There are two firms each with cost zero. Each firm chooses its output. The…
A: Given information Cost=0 There are 2 firm under Cournot duopoly Demand function for both the firm…
Q: b) Consider 2 firms in an oligopoly industry that compete on output choice. They face an inverse…
A:
Q: Consider the following Cournot duopoly. Both firms produce a homogenous good. The demand function is…
A: A duopoly model with asymmetric knowledge on the marginal cost of company 2 is shown here.
Q: Sometimes oligopolies in the same industry are very different in size. Suppose we have a duopoly…
A: This is the case of duopolies which is an extension of monopoly where both the firms dominate the…
Q: Oligopoly Consider a market in which the market demand curve is given by P = 18 - Q, Firm 1 has a…
A: Market demand curve: The sum of all individual demand curves in a market is the market demand curve.…
Q: Alcoa and Kaiser, duopolists in the market for primary aluminum ingot, choose prices of their 500…
A: Cooperation in repeated games that have an infinite time period can be sustained with trigger…
Q: suppose two firms compete as Cournot Oligopolists. The profit functions of these two firms are T =…
A: Best Response Function of firm1 : q1 = 65 - 0.5q2 Best Response Function of firm 2 : q2 = 65 -…
Q: Alcoa and Kaiser, duopolists in the market for primary aluminum ingot, choose prices of their 500…
A: For an infinitely repeated game, the players can employ trigger strategies to sustain cooperation.…
Q: Alcoa and Kaiser, duopolists in the market for primary aluminum ingot, choose prices of their 500…
A: A payoff matrix is a method to convey the result of players' decisions in a game. A payoff matrix…
Q: A Cournot Oligopoly (duopoly) exists where the market demand function facing each of the two firms…
A: Given : Demand function: P=4-(Q1+Q2) where Q=Q1+Q2
Q: The firms in a duopoly produce differentiated products. The inverse demand for Firm 1 is P1 = 52 -91…
A: To find the Cournot Nash equilibrium, we need to find the quantities at which each firm is…
Q: Two firms A and B compete in a Cournot duopoly environment. The (inverse) market demand curve is…
A: Answer: Given, Inverse market demand function: P=88-0.5QWhere,Q=QA+QB Total costs: TCA=8QATCB=8QB…
Q: Two firms compete by choosing price. Their demand functions are: Q1 = 20 -P1 +P2 and Q2 = 20 - P1 +…
A:
Q: b) Consider 2 firms in an oligopoly industry that compete on output choice. They face an inverse…
A: Two firms are in Cournot duopoly when they compete in quantity, and their production decision…
Q: Consider the following Cournot duopoly. Both firms produce a homogenous good. The demand function is…
A: Cournot duopoly is a simultaneous game in which both the firm choose the level of production…
Q: The fact that the firms in an oligopoly are mutually interdependent means that each firm: must…
A: An oligopoly is a market structure in which a market or industry is overwhelmed by few huge dealers…
Q: Two firms operating in the same market must decide between charging a high price or a low price. The…
A: In game theory, the dominating strategy describes a situation in which one player has better tactics…
Q: Consider a market with two firms managed by Harry and Vera. Under a cartel (both firms pick the high…
A: The game theory is a branch of applied mathematics and economics. It studies the interaction of…
Q: Consider a market with two drink manufacturers, Cola and Pepsi. In the following event, each firm…
A: "A payoff matrix in game theory depicts the result of each player's choice in the game."
Q: Firms 1 and 2 compete in a Cournot duopoly. If firm 2 adopts a strategy that raises firm 1's…
A: In a market, the reaction function refers to the economic representation of the reaction of a player…
Q: Two firms are playing an infinitely-repeated prisoner's dilemma pricing game of the following form:…
A:
Q: Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity q₁. Firms 2…
A:
Q: Consider a Cournot competition game. The market demand function is: p= 4 – q1 – q2, - - where p is…
A: Given Market demand function: p=4-q1-q2 ... (1) Marginal cost =0 for both firm We have…
Q: Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity q₁. Firms 2…
A: Given information There are 3 firms Demand function P=100-Q Q=q1+q2+q3 C1=5q1 C2=4q2 C3=4q3
Q: Refer to the normal-form game of price competition in the payoff matrix below Firm B Low…
A: In game theory, the normal form is a portrayal of a game. Not at all like broad form, normal-form…
Q: Dizz Cut price Maintain price Perlis Cut price (-1,-1) A (2,-2) B Maintain price (-2,2) (1,1) D…
A: A Nash equilibrium is an equilibrium outcome from which none of the players want to deviate. There…
Q: Consider the following three-stage duopoly game. There are two firms in the market: Firm 1 and Firm…
A: Under a duopoly model, one of the player moves, and after viewing the first player, the second…
Q: Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity g. Firms 2…
A:
Q: Suppose that there are two firms producing a homogenous product and competing in Cournot fashion and…
A: Each firm in Cournot oligopoly maximizes profit by producing at a point where their respective…
Q: A Cournot Oligopoly (duopoly) exists where the market demand function facing each firms is P = 4 -…
A: Demand function; P= 4-(Q1+Q2) where; Q= Q1+Q2 Therefore; P=4-Q Marginal cost is zero Let the…
Q: Alcoa and Kaiser, duopolists in the market for primary aluminum ingot, choose prices of their 500…
A: The time value of money (TVM) is the idea that a sum of money is worth more now than the same sum…
Q: Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity q1. Firms 2…
A: Hello. Since you have posted multiple parts of the question and not specified which part of the…
part D urgently
Step by step
Solved in 2 steps with 4 images
- Consider a Cournot oligopoly with n = 2 firms. Firm 1 cost function is TC₁ (9₁) = 20 + 12q₁ + q², while firm 2 cost function is TC₂ (9₂) = 50 +8q2 + q2 . The total market demand is P(Q) = 50 — 2Q, where Q is the total quantity produced by all (active) firms in the industry. a- Compute the Cournot equilibrium total quantity, price, quantity for each firm, and profit for each firm. Which firm is making higher profits? b- Consider the situation in which a third firm (firm 3) enters the market. What is the total equilibrium quantity, price, quantity and profit for each firm if TC3 = TC₁? [hint: q₁ and q3 will be the same, since 1 and 3 are identical] c- How would your answer at point b change if instead TC3 = TC₂? Would consumers prefer firm 3 to enter with the total cost of firm 1 or firm 2? d- What would be the highest one-time cost that firm 3 would be willing to pay to enter the market and then compete in a Cournot game with total cost equal to firm 1?In the duopoly market where two firm exist, the demand curve is given as follows. P=120-y (y is the total market output) Firm1 has a marginal cost of 10 and Firm 2 has a marginal cost of 20. 1. Determine the Firm1’s reaction function and the Firm2’s reaction function. 2. What is the output of each firm in the Cournot equilibrium? 3. Firm1 is Stackelberg leader, Firm2 is Stackelberg follower. How much should the leader produce in order to maximize profits? I don't know the answer of number 2 and 3. some says number 2 answer is both 60 but some also says that its each 60 and 40 units. Also, for number 3, some says its maximize profit is 140 but some says 80. I don't know what the correct answer is. please show me the correct answer and correct explanantion.Walmart (firm 1) and Amazon (firm 2) are a duopoly in the grocery market. They are faced with an inverse demand of P(Q1, Q2) = 16−2 (Q1+Q2) and total costs of TC(Qi) = 2Q2i, i= 1,2. Note that the marginal cost is not constant! 1. Obtain the Cournot equilibrium quantities and profits. 2. Obtain the Stackelberg equilibrium in which Walmart moves first. Compare with the Cournotequilibrium. 3. Obtain the cartel outcome (= shared monopoly). Compare with Stackelberg and Cournot.
- 1 Consider a duopoly with firm 1 and firm 2. Their cost functions are 2q₁ and cq2, respectively, where 2 < c < 10. The market demand function is p=10-Q, where Q=q₁+9₂. (a) Assume that the two firms play the Bertrand price game. Find the firms' price choices in the Bertrand equilibrium. (b) Assume that the two firms play the Cournot quantity game. Find the firms' quantity choices in the Cournot equilibrium.Consider a Stackelberg duopoly:There are two firms in an industry with demand Q = 1 − Pd.The “leader” chooses a quantity qL to produce. The “follower” observes qL and chooses a quantity qF.Suppose now that the cost function is Ci(qi) = qi2 for i = L, F. (a) Find the subgame perfect equilibrium. (b) Compare the equilibrium you found with the Nash equilibrium if the game was simultaneous (i.e., Cournot competition). Is the Nash equilibrium of the Cournot game also a Nash equilibrium of the sequential game? Why or why not?Consider a duopolistic market in which the two identical firms compete by selecting their quantities. The inverse market demand is P(Q) = 210−Q and each firm has a marginal cost of $15 per unit. Assume that fixed costs are negligible for both firms. Cournot Model Determine the Nash-Cournot equilibrium for this market.(Enter your responses rounded to two decimal places.) Firm 1's quantity: q1= ? units. Firm 2's quantity: q2 = ? units. Market price: P= ? Stackelberg Model Determine the Nash-Stackelberg equilibrium for this market, assuming that Firm 1 is the Stackelberg leader. (Enter your responses rounded to two decimal places.) Firm 1's quantity: q1 = ? units Firm 2s quantity: q2 = ? units. Market price: P = ?
- Consider a Cournot duopoly with the inverse demand P = 200−2Q. Firm 1 and 2 compete by simultaneously choosing their quantities. Both firms have constant marginal and average cost MC = AC = 20. A) Find each firm’s best response function. Plot the best response functions (label the x-axes as ?1 and y-axes as ?2 ). B) Find the Cournot-Nash equilibrium quantities, profits and market price. Illustrate the equilibrium point on your graph in part AConsider a Cournot duopoly with the inverse demand P = 200 − 2Q. Firm 1 and 2 compete by simultaneously choosing their quantities. Both firms have constant marginal and average cost MC = AC = 20. A) Find each firm’s best response function. Plot the best response functions (label the x-axes as ?1 and y-axes as ?2 ). B) Find the Cournot-Nash equilibrium quantities, profits and market price. Illustrate the equilibrium point on your graph in part (A). C) Suppose instead that firm 1 had MC = AC = 20, but firm 2’s MC = 8. What is the Cournot-Nash equilibrium outputs and profits now? How would this affect your answers to part (B)? Explain1. Two firms (A and B) play a competition game (i.e. Cournot) in which they can choose any Qi from 0 to ¥. The firms have the same cost functions C(Qi) = 10Qi + 0.5Qi2, and thus MCi = 10 + Qi. They face a market demand curve of P = 220 – (QA + QB). Now assume firm A chooses quantity first. Firm B observes this choice and then chooses its own quantity. d)Firm A has MRA = 150 – 4QA/3. What are the equilibrium QA and QB selected in this game? e)What is the equilibrium price, and how much profit does each firm collect?
- Consider a Cournot duopoly with a demand function of p=10-Q(where Q=q1+q2) and a constant marginal cost of c>0. a) Find the two firms’ best-response functions. b) Find the Nash equilibrium output. c) What happens to the equilibrium market price as c increases (assuming that c remains below 10)? d) What happens to the equilibrium market price if c increases above 10?A homogenous-good duopoly faces an inverse market demand function of p = 150 − Q. Assume that both firms face the same constant marginal cost, MC1 = MC2 = 30. Calculate the output of each firm, the market output, and the market price in a Nash-Cournot equilibrium Re-solve part (a) assuming that the marginal cost of firm 1 falls to MC1 =20 Explain what will happen to each firm’s output, the market output, and the market price if the two firms can collude (e.g., form a cartel)Consider a duopoly in which two identical firms compete by setting their quantities but Firm 1 has first mover advantage (i.e., Firm 1 is the Stackelberg Leader). We want to consider whether Firm 1 should use its advantage to drive Firm 2 out of the market.