in the simple mit pricing model, the entrant moves first to choose to Enter the market or Stay Out. Once the entrant moves, the incumbent fem choose to Fight or Share. If the entrant choose to sm entrant receives zero profit while the incumbent eems the monopoly prett. Suppose when the incumbent and the entrant Fight, they compete in Bertrand style and when the incumbent Share the marke firms compete in Cournot style. Complete the following game by fill in the associated payoffs at the end nodes and solve the game using the backward induction (e find the equibrum path. Assume a entrant and incumbent have the same marginal cost of 2 and the inverse demand is P-14-0 Entrant Incumbent Share, Enter Fight Stay Out If Entrant enters and Incumbent shares, the payoff for the Entrant in If Entrant enters and incumbent fights, the payoff for the Entrant is and the payoft for the Incumbent is and the payoff for the Incumbent in

in the simple mit pricing model, the entrant moves first to choose to Enter the market or Stay Out. Once the entrant moves, the incumbent fem choose to Fight or Share. If the entrant choose to sm entrant receives zero profit while the incumbent eems the monopoly prett. Suppose when the incumbent and the entrant Fight, they compete in Bertrand style and when the incumbent Share the marke firms compete in Cournot style. Complete the following game by fill in the associated payoffs at the end nodes and solve the game using the backward induction (e find the equibrum path. Assume a entrant and incumbent have the same marginal cost of 2 and the inverse demand is P-14-0 Entrant Incumbent Share, Enter Fight Stay Out If Entrant enters and Incumbent shares, the payoff for the Entrant in If Entrant enters and incumbent fights, the payoff for the Entrant is and the payoft for the Incumbent is and the payoff for the Incumbent in

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: Oligopoly

Section: Chapter Questions

Problem 9PA

See similar textbooks

Similar questions

Does each individual in a prisoners dilemma benefit more from cooperation or from pursuing self-interest? Explain briefly.
◄ Search 12:47 PM Sun Nov 12 ← Note Nov 12, 2023 Uptown's price strategy The Nash equilibrium occurs when High Low LED RareAir's price strategy High $12 $15 The more favorable outcome would be for $12 Tt ✪ $6 B Low $6 D $8. $15 $8 S O both firms have an incentive to deviate from this strategy given the strategy of the competing firm. It is shown by the dominant strategy of cell A. 92% neither firm has an incentive to deviate from this strategy given the strategy of the competing firm. It is shown by the dominant strategy of cell D. O one firm consistently has an incentive to deviate from this strategy given the strategy of the competing firm. It is shown by the high-price strategy of cell B. O one firm consistently has an incentive to deviate from this strategy given the strategy of the competing firm. It is shown by the high-price strategy of cell C. O the firms to collude and use the high-price strategy but this strategy requires cooperation. O one firm to take the lead and let the…
Otto has a monopoly on limousine service, and Carla is thinking about Kentenng the market. The outcome of the entry-deterrence game represented by the game tree to the right is that Otto picks the quantity and Carla the market Small Quantity Otto Large Quantity Carla Carla Enter Stay out Enter Otto $50 Carla $50 Otto $90 Carla 50 Otto So Carla -$10 Otto $60 Stay out Carla $0 a C
You are playing a game with a friend. It’s yourmove but you don’t have a dominant strategy.Your payoff depends on what your friend doesafter your move. You consider flipping a coin todecide what to do. You are about to reach for acoin, but then you realize that your friend has adominant strategy. Explain how using backwardinduction (rather than a coin toss) will now determine your next move
Consider the payoff matrix of Hulu and Netflix. Why don't both firms just raise prices? NETFLIX HULU 15, 15 8, 20 20, 8 10, 10 O It is in each firm's profitable interest to lower prices, no matter what the other competitor does. O Raising prices is illegal in this case. O Firms are concerned about a third competitor entering at higher prices. O Higher prices will increase the number of customers beyond what the firms can handle.
There are two firms in the market (duopoly). These two firms are competingsimultaneously. The first firm chooses its output level (x) by predicting the second firm’soutput (y). Let c denote the total cost function c(x) = x and c(y) = y. Also, let’s assumethat the inverse demand function is p(Y) = 7 - Y where Y = x + y. (1) Obtain the reactionfunction of the first firm. (2) Find the equilibrium (output and profit of each firm) whentwo firms simultaneously compete
fnan421 Word Gozden Geçir Górunum Vard m e vaomak sted nz sOv eyin 1) Two firms, X and Y, are planning to market their new products. Each firm can develop either TV or Laptop. Market research indicates that the resulting profits to each firm for the alternative strategies are given by the following payoff matrix: FIRM Y TV LAPTOP FIRM X TV 30, 30 20, 35 LAPTOP 40,70 20, 20 A) What is the cooperative outcome? B) Which firm benefits most from the cooperative outcome? How much would that firm need to offer the other?
Consider the following price game: Firm 1 Firm 2 High Low High 20, 20 12, 24 Low 24, 12 14, 14 Remark: In simultaneous move games (games with rows and columns) theconvention is to write the row player’s payoff first and the column player’spayoff second. (a) What is the Nash equilibrium of this game? Recall that for each playeryou should find the best response to each of the opponents’ strategies andunderline the associated payoff. Then look for a cell where both strategiesare best responses to each other. This is a Nash equilibrium. (b) Does either firm have a dominate strategy (a strategy that is always abest response)?
Refer to the table below to answer the following questions. Table 14.2.10 Fim A Comply A: Sim Cheat A $1 Sm Comply B Sim B-S05m Firm B A:-50.5m A0 Cheat B $15m B:0 Refer to Table 14.2.10. Firm A and Firm B are the only producers of soap powder. They collude and agree to share the market equally. The equilibrium a dominant strategy equilibrium because the strategy in this game is for a firm Select one O A is to comply regardless of the other firm's choice O B.is to comply when the other firm cheats and to cheat when the other firm complies O Cis not to comply when the other firm complies and to cheat when the other firm cheats OD. is to cheat regardless of the other firm's choice OEis not to comply when the other firm cheats and to cheat when the other firm complies 219 PM
Consider the group of games called the Prisoners' Dilemma games. Which of the following is not true about the games? Each player has a unique best response There is a Nash Equilibrium where both players randomize over their options O Each player cgyld do better if the Nash Equilibrium was not the outcome All of the other answers are correct Either player would be made better off if their opponent was to unilaterally deviate from a Nash Equilibrium
1. Find all subgame perfect nash equilibrium 2. Find a nash equilibrium that is not SPNE, and explain why it is not an SPNE.
Two firms produce and sell differentiated products that are substitutes for each other. Their dernand curves are Firm 1:Q, 40-3P,+ P, Firm 2: 0, - 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 equiltbirium set of prices. Since Ihe firms ane identical, they wil set the same prices and produce the same quantities. In equibrium, each firm will charge a price of 8 and produce units of output. (Enter your responses rounded to wo decimal places)