10 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 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. Eliminating all strongly dominated actions by the two firms in the first round. In the game that remains eliminate all strongly dominated actions in a second round. What is the set of actions that are still available to each of the two firms after the second elimination round? [Write your answer as an interval; e.g.: [0.2,0.4] or (0.3, 0.5], etc.]

10 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 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. Eliminating all strongly dominated actions by the two firms in the first round. In the game that remains eliminate all strongly dominated actions in a second round. What is the set of actions that are still available to each of the two firms after the second elimination round? [Write your answer as an interval; e.g.: [0.2,0.4] or (0.3, 0.5], etc.]

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.8P

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Problem 3. Consider the following game with three firms. First, firms 1 and 2 si- multancously choose quantities q1 and q2 respectively. After observing firm 1 and 2's quantities, firm 3 chooses its quantity q3. There is no production cost and the inverse demand function is p= 12 – (91 +2 + 93). (a) Compute the SPNE of this game. (b) Give an example of Nash equilibrium s* with s = 4 and s, = 6 , that is not subgame perfect. game theory question
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.
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◄ 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…
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