Firms A and B choose how much of a a homogenous good to produce at a marginal cost of 1. The inverse demand function is p = 25 – qA – qB where qa is the output choice of firm A and qB is the output choice of firm B. A firm's action is its output choice and can be any number greater than or equal to zero. Eliminate all strongly dominated actions by the two firms. In the game that remains what is the action set of each of the two firms? [Write your answer as an interval; e.g.: [0.2, 0.4] or (0.3,0.5], etc.]
Q: Consider a market with two fims that face demand curves p1 a-bq1 -Bq2 p2 = a bq2 - Bq1. Which of the…
A: A market with two firms that faces demand curves have prices that come from the demand curve. If two…
Q: Consider a Cournot Oligopoly. One firm has costs C1(Q1) = 12Q1 while the other firm’s cost function…
A: The Cournot oligopoly model is the most famous model of the blemished contest. In the Cournot model,…
Q: Consider a "Betrand price competition model" between two profit maximizing widget producers say A…
A: In a Bertrand model of oligopoly, firms independently choose prices (not quantities) in order to…
Q: A homogenous good industry consists of two firms (firm 1 and firm 2). Their cost functions are cq₁…
A: In this question there are two businesses firm 1 and firm 2 producing the same product. Each…
Q: Assume that there are two identical firms serving a market in which the inverse demand function is…
A: Oligopoly is a kind of imperfect market structure. It consists of few sellers that are large in size…
Q: Consider the following entry game: Here, firm B is an existing firm in the market, and firm A is a…
A: In-game theory, the term "Nash equilibrium" refers to a situation in which the best outcome is…
Q: Consider two firms with a homogeneous product who face the market demand function p = 2 – q1 – 42,…
A: Demand function : p = 2 - q1 - q2 Marginal Cost : c =1 There are two firms competing in quantities…
Q: In a duopoly market, two firms produce the identical products, the cost function of firm 1 is: C, =…
A: we have, Q=q1 +q2 Demand function=P=500-2Q or…
Q: In a duopoly market, two firms produce the identical products, the cost function of firm 1 is: C, =…
A: In the Stackelberg model of oligopoly, the firm leader firm determines its output first given the…
Q: Three electricity generating firms are competing in the market with the inverse demand given by P(Q)…
A:
Q: Two firms compete by choosing price. Their demand functions are Q, = 20 - P, + P2 and Q2 = 20 + P1 -…
A: Demand function is what describes a relationship between one variable and its determinants. It…
Q: Consider a market that only includes two large firms. The (inverse) market demand is P = 100 – Q.…
A: Answer: Given: Inverse market demand function: P=100-QWhere,Q=q1+q2 Firm 1 cost function:C1=2q1Firm…
Q: Imagine two vendors (our players) who must simultaneously choose a location to position their…
A: Location game is the concept of the game theory where n number of players choose the location for…
Q: Consider the following statements about the Stackelberg game from the slides, assuming both firms…
A: Answer-
Q: Suppose we have a duopoly with a market demand curve P-100-1.5Q. Firm A has TCA=25+2qA while Firm B…
A:
Q: Consider a Stackelberg duopoly with the demand function p=10-Q where Q=q +q,. Firms 1 and 2 have…
A:
Q: The market (inverse) demand function for a homogeneous good is P(Q) = 10 – Q. There are two firms:…
A: Total cost is the expenditure of converting raw material into finished goods. It means the…
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: How would the Cournot equilibrium change in the airline example if American's marginal cost were…
A: The optimum response function for each nation must first be derived before we can calculate the…
Q: Consider a market for crude oil production. There are two firms in the market. The marginal cost of…
A: Answer: Given, Inverse demand curve: PQ=200-QWhere,Q=q1+q2 Marginal cost of firm 1:MC1=20Marginal…
Q: Consider a Stackelberg duopoly with the demand function p= 10-Q where Q =q +q;. Firms 1 and 2 have…
A: Firm 1:- we have P=10-Q or P=10-q1 -q2 and MC1 =c1 TR1 = 10q1 - q12 - q2q1 MR1=10-2q1 -q2 In profit…
Q: Two firms produce and sell differentiated products that are substitutes for each other. Their demand…
A:
Q: Consider a market with demand p(q) = 10 - q. There are infinitely many firms that could enter this…
A: GIVEN Consider a market with demand p(q) 10-q. There are infinitely many firms that could enter…
Q: Three electricity generating firms are competing in the market with the inverse demand given by P(Q)…
A:
Q: Consider the following "location game." There are two ice cream sellers (Seller 1 and Seller 2) in a…
A: Location Game is defined as a kind of a pervasive game where the game evolves around the players…
Q: Consider two firms with differentiated products, whose demand functions are given by 41 = 2 – 2pı +…
A: Given information Demand function for firm 1 q1=2-2p1+p2 Demand function for Firm 2 q2=2-2p2+p1…
Q: Consider the following Cournot duopoly. Both firms produce a homogenous good. The demand function is…
A: A duopoly is a form of market where there are two sellers and many buyers. The price in this market…
Q: Exercise Two firms compete for market shares producing similar goods under imperfect competition.…
A: Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-parts at a…
Q: Suppose two firms, A and B, have a cost function of C(q;) = 30qi, for i = A,B. The inverse demand…
A: An oligopoly is a form of market where there are a few sellers with a large number of buyers.…
Q: 1. Consider the following Cournot model. The inverse demand function is given by p = 30 –Q, where Q…
A: In Cournot duopoly, two firms compete in quantity and simultaneously choose the optimal quantity…
Q: There are two identical firms, and the inverse demand function is given by P(q1, 42) 19 – (41 + 92).…
A:
Q: Consider a Stackelberg duopoly with the demand function p=10-Q where Q =q +q,. Firms 1 and 2 have…
A:
Q: Two firms produce and sell differentiated products that are substitutes for each other. Their demand…
A: The total revenue of the firm can be calculated by multiplying the price with quantity. For the firm…
Q: Consider an industry with two identical firms (denoted firm 1 and 2) producing a homogenous good.…
A:
Q: There are two firms in a market and they compete in a Nash-Cournot manner. Firm 1 faces the demand…
A:
Q: Two firms compete by choosing price. Their demand functions are: Q1 = 20 -P1 +P2 and Q2 = 20 - P1 +…
A:
Q: What is the homogeneous-good duopoly Cournot equilibrium if the market demand function is…
A: Since in Cournot model Q= q1 + q2 Q = 4000-1000p VC q1 = .22 q1 VC q2 = .22q2 MC q1 = .22…
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: Consider the following game. E (entrant) is considering entering a market that currently has a…
A: (a) The given game can be represented in the normal form in the following way : Firm I has to…
Q: Three electricity generating firms are competing in the market with the inverse demand given by P(Q)…
A: Firm1: π= (20-q1- q2-q3)q1 - 5q1 Best response curve: 20 - 2q1 - q2- q3 - 5 =0 15 - q2- q32= q1_[1]…
Q: Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity q₁. Firms 2…
A:
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: Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity g. Firms 2…
A:
Q: Kafue Water and Sewerage Company and Lusaka Water and Sewerage Company are duopolistic firms…
A: Introduction Kafue Water and Sewerage Company and Lusaka Water and Sewerage Company are duopolistic…
Q: Table: Two Rival Gas Stations Speedy Gas High Price. Low Price $100, $100 $150, $25 High Price $25,…
A: Tit-for-tat strategy means when a firm choose to opt the same strategy similar to the other firm.
Q: Consider the Cournot competition between two firms with different marginal costs. For firm 1, let…
A: Cournot competition is an economic model in which competing enterprises independently and…
Q: Two firms compete in a market to sell a standardized product and the inverse demand in the market is…
A: In case of Stackleberg model the leader first chooses the quantity given the quantity of firm 2.…
Plz solve this.
Step by step
Solved in 2 steps
- Consider a market that only includes two large firms. The (inverse) market demand is P = 100 – Q. 3q2. Firm 1 has a cost function of C, = 2q1, and firm 2 has a cost function of C2 Use a Cournot model to calculate the Nash equilibrium outputs q, and q2 of the two firms. and 92 (a) Give each firm's profit as a function of (b) Compute the Nash equilibrium q, and q2.Two firms produce and sell differentiated products that are substitutes for each other. Their demand curves are Firm 1: Q, = 40 - 3P,+ P2 Firm 2: Q, = 40 - 3P2+ P, Both firms have constant marginal costs of $3.10 per unit. Both firms set their own price and take their competitor's price as fixed. Use the Nash equilibrium concept to determine the equilibrium set of prices. Since the firms are identical, they will set the same prices and produce the same quantities. In equilibrium, each firm will charge a price of $ and produce units of output. (Enter your responses rounded to two decimal places.)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?
- 1. The market (inverse) demand function for a homogeneous good is P(Q) = 10 - Q. There are two firms: firm 1 has a constant marginal cost of 2 for producing each unit of the good, and firm 2 has a constant marginal cost of 1. The two firms compete by setting their quantities of production, and the price of the good is determined by the market demand function given the total quantity. a. Calculate the Nash equilibrium in this game and the corresponding market price when firms simultaneously choose quantities. b. Now suppose firml moves earlier than firm 2 and firm 2 observes firm 1 quantity choice before choosing its quantity find optimal choices of firm 1 and firm 2.Consider two firms that produce the same good and competesetting quantities. The firms face a linear demand curve given by P(Q) =1 − Q, where the Q is the total quantity offered by the firms. The costfunction for each of the firms is c(qi) = cqi, where 0 < c < 1 and qiis the quantity offered by the firm i = 1, 2. Find the Nash equilibriumoutput choices of the firms, as well as the total output and the price, andcalculate the output and the welfare loss compared to the competitiveoutcome. How would the answer change if the firms compete settingprices? What can we conclude about the relationship between competitionand the number of firms?Consider two firms with a homogeneous product who face the market demand function p = 2 – q1 – 92, where q; and p are the quantities and price. Their constant marginal costs are given by c= 1. The firms compete in quantities in a simultaneous move game. Use this specific example (not a general case) to show that the Nash equilibrium is not Pareto efficient, and the cooperative solution is not an equilibrium (in the sense that both firms have an incentive to cheat). In your answer, use the fact that the firms are identical. Namely, they produce equal amounts (both in the simultaneous move game and in the cooperative case).
- Consider the following normal form representation of the standard competition between firm A and firm B. Each firm can choose either standard A or standard B. Their payoffs are given as follows: Firm B A В A Firm A В 1 1 3 1 (1) (10 points) What's Nash equilibrium (NE) in this game? If there are more than one, find them all. But there is no NE, state that there is no NE. (2) (10 points) If you find a NE (or multiple Nash equilibria), is it (or are they) Pareto efficient?In a given market the demand for a homogenous product is given by p(q) = 120 – 5Q. The market has two firms, firm 1 has a marginal cost cı 5 and firm 2 has a marginal cost c2 = : 10. (i) Assume that the firms compete in a Cournot game. Compute the price in equilibrium, quantity produced by each firm and deadweight loss generated in this market.Suppose two firms, A and B, have a cost function of ?(??) = 30??, for ? = ?, ?. The inverse demand for the market is given by ? = 120 − ?, where Q represents the total quantity in the market, ? = ?? + ??. 1. Solve for the firms’ outputs in a Nash Equilibrium of the Cournot Model. 2. Let Firm A be the first mover, and Firm B be the second mover. Solve for the firms’ outputs in a SPNE of the Stackelberg Model.
- Consider an industry with two identical firms (denoted firm 1 and 2) producing a homogenous good. Firms compete in quantities. Firm 1 has a constant marginal cost of 20. Firm 2 has a constant marginal cost of 80. Demand in the industry is given by D(p) = 380 - p. Let q1 and 92 denote the quantities of firm 1 and 2, respectively. Derive the Nash equilibrium in quantities. What is the total production in this industry?Two firms produce and sell differentiated products that are substitutes for each other. Their demand curves are Firm 1: Q₁ = 40-3P₁+ P2 1 Firm 2: Q₂ = 40 -3P 2+P1 Both firms have constant marginal costs of $4.70 per unit. Both firms set their own price and take their competitor's price as fixed. Use the Nash equilibrium concept to determine the equilibrium set of prices. Since the firms are identical, they will set the same prices and produce the same quantities. In equilibrium, each firm will charge a price of $ and produce units of output. (Enter your responses rounded to two decimal places.) Each firm will earn a profit of $ (Enter your response rounded to two decimal places.)Two firms produce Bliffs. They compete by simultaneously choosing prices in a single period. The demand for Bliffs is given by P(Q) = 100-2Q where Q is market quantity and P is market price. Firm 1 has costs C1(q1) = 20q1 and Firm 2 has costs C2(q2) = 10q2. Which statement is true? In the Nash equilibrium to the game, both firms play dominated strategies None of the other answers are correct O In the Nash equilibrium to the game, both firms play dominant strategies In the Nash equilibrium to the game, both firms slowly lower prices towards marginal costs O In the Nash equilibrium to the game, both firms set price equal to marginal cost