ECON 101 Lecture Notes - Lecture 12: Monopolistic Competition, Becquerel, Nash Equilibrium

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orchidpig108

20 Jul 2018

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Outline for today: cournott (continued, differentiated products ( monopolistic competition) 2 first linear demand + constant (cid:1839)(cid:1829)=(cid:1827)(cid:1829)=(cid:1829)(marginal cost=average cost=total cost) From last class we obtained the best responses : (cid:1828)(cid:2869)(cid:4666)(cid:1869)(cid:2870)(cid:4667),(cid:1869)(cid:2869)=(cid:3028) (cid:2870)(cid:3029) (cid:2869)(cid:2870)(cid:1869)(cid:2870, (cid:1828)(cid:2870)(cid:4666)(cid:1869)(cid:2869)(cid:4667),(cid:1869)(cid:2870)=(cid:3028) (cid:2870)(cid:3029) (cid:2869)(cid:2870)(cid:1869)(cid:2869) a c b a c. As the problem is symmetric, we can find a symmetric ne. (cid:1869)(cid:2869) =(cid:1869)(cid:2870) (cid:1869)(cid:2869) =(cid:1853) (cid:1829)(cid:885)(cid:1854) (cid:883)(cid:884)(cid:1869)(cid:2869) (cid:1869)(cid:2869) =(cid:1853) (cid:1829)(cid:885)(cid:1854) =(cid:1869)(cid:2870) (cid:1869)=(cid:1869)(cid:2869)+(cid:1869)(cid:2870)=(cid:884)(cid:4666)(cid:1853) (cid:1829)(cid:4667) (cid:885)(cid:1854) (cid:1868)=(cid:1853) (cid:1854)(cid:4678)(cid:884)(cid:4666)(cid:1853) (cid:1829)(cid:4667) (cid:4679)=(cid:1853)+(cid:884)(cid:1829)(cid:885) (cid:885)(cid:1854) (cid:1866) firms; linear demand, constant (cid:1839)(cid:1829)=(cid:1827)(cid:1829)=(cid:1829) (cid:1372) for firm (cid:1861): (cid:3036)=(cid:1868)(cid:1869)(cid:3036) (cid:1829)(cid:1869)(cid:3036)=(cid:4666)(cid:1868) (cid:1829)(cid:4667)(cid:1869)(cid:3036) So (cid:3036)=(cid:4672)(cid:1853) (cid:1829) (cid:1854)((cid:1869)(cid:3036)+ (cid:1868)=(cid:1853) (cid:1854)(cid:4684)(cid:1869)(cid:3036)+ (cid:1869)(cid:3037) (cid:3037)=(cid:2869) (cid:4685) where (cid:1862) (cid:1861) (cid:1869)(cid:3037) =(cid:1853)(cid:1869)(cid:3036) (cid:1829)(cid:1869)(cid:3036) (cid:1854)(cid:1869)(cid:3036)(cid:2870) (cid:1869)(cid:3036)(cid:1854) (cid:1869)(cid:3037) (cid:3037)=(cid:2869) (cid:1372) foc with respect to (cid:1869)(cid:3036), taking (cid:1869)(cid:3037) for (cid:1862) (cid:1861) as given (cid:3036)(cid:1869)(cid:3036)=(cid:1853) (cid:1829) (cid:884)(cid:1854)(cid:1869)(cid:3036) (cid:1854) (cid:1869)(cid:3037) (cid:3037)=(cid:2869)(cid:3037) (cid:3036) =(cid:882) (cid:1828)(cid:3036)? (cid:1869)(cid:3036)=(cid:1853) (cid:1829) (cid:1854) (cid:1869)(cid:3037) (cid:3037)=(cid:2869) (cid:884)(cid:1854) Note: is just a sum of all items but (cid:1861) (cid:1869)(cid:3037) (cid:3037)=(cid:2869) (cid:3037)=(cid:2869)(cid:3037) (cid:2870) =(cid:1869)(cid:2869)+(cid:1869)(cid:2871)+(cid:1869)(cid:2872)+ +(cid:1869)

Related Questions

Firms 1 and 2 produce horizontally differentiated products. The demand for firm 1's product is given by the equation,

Q1 = 100 - P1 +P2/2

The demand for rm 2's product is given by the equation,

Q2 = 200 - 4P2 + 2P1.

Firm 1's marginal cost is MC1 = $10, while firm 2's marginal cost is MC2 = $20. The two Firms compete in Bertrand competition, by simultaneously selecting prices.

Question 1: Is Firm 2's product a substitute or a compliment for Firm 1's product? Briefly explain. Your answer must reference firm 1's demand function. (2 Marks)

Question 2: Does the demand for firm 2's product satisfy the law of demand? Brieflyexplain. Your answer must reference firm 2's demand function. (2 Marks)

Question 3: What is the equation of firm 1's best-response function? (4 Marks)

Question 4: What is the equation of Firm 2's best-response function? (4 Marks)

Question 5: Find the equilibrium prices. (2 Marks)

Question 6: Find the equilibrium profits. (3 Marks)

Question 7: Which firm enjoys the greater market power? (3 Marks)

Firms 1 and 2 produce horizontally differentiated products. The demand for firm 1âs product is given by the equation, Q1 = 100 â P1 + P2 2 . The demand for firm 2âs product is given by the equation, Q2 = 200 â 4P2 + 2P1. Firm 1âs marginal cost is MC1 = $10, while firm 2âs marginal cost is MC2 = $20. The two firms compete in Bertrand competition, by simultaneously selecting prices. Question 1: Is firm 2âs product a substitute or a compliment for firm 1âs product? Briefly explain. Your answer must reference firm 1âs demand function. (2 Marks) Question 2: Does the demand for firm 2âs product satisfy the law of demand? Briefly explain. Your answer must reference firm 2âs demand function. (2 Marks) Question 3: What is the equation of firm 1âs best-response function? (4 Marks) Question 4: What is the equation of firm 2âs best-response function? (4 Marks) Question 5: Find the equilibrium prices. (2 Marks) Question 6: Find the equilibrium profits. (3 Marks) Question 7: Which firm enjoys the greater market power? (3 Marks)Firms 1 and 2 produce horizontally differentiated products. The demand for firm 1âs product is given by the equation, Q1 = 100 â P1 + P2 2 . The demand for firm 2âs product is given by the equation, Q2 = 200 â 4P2 + 2P1. Firm 1âs marginal cost is MC1 = $10, while firm 2âs marginal cost is MC2 = $20. The two firms compete in Bertrand competition, by simultaneously selecting prices. Question 1: Is firm 2âs product a substitute or a compliment for firm 1âs product? Briefly explain. Your answer must reference firm 1âs demand function. (2 Marks) Question 2: Does the demand for firm 2âs product satisfy the law of demand? Briefly explain. Your answer must reference firm 2âs demand function. (2 Marks) Question 3: What is the equation of firm 1âs best-response function? (4 Marks) Question 4: What is the equation of firm 2âs best-response function? (4 Marks) Question 5: Find the equilibrium prices. (2 Marks) Question 6: Find the equilibrium profits. (3 Marks) Question 7: Which firm enjoys the greater market power? (3 Marks)

Firms 1 and 2 produce horizontally differentiated products. The demand for firm 1âs product is given by the equation, Q1 = 100 â P1 + P2/ 2 The demand for firm 2âs product is given by the equation, Q2 = 200 â 4P2 + 2P1. Firm 1âs marginal cost is MC1 = $10, while firm 2âs marginal cost is MC2 = $20. The two firms compete in Bertrand competition, by simultaneously selecting prices.

Question 1: Is firm 2âs product a substitute or a compliment for firm 1âs product? Briefly explain. Your answer must reference firm 1âs demand function. (2 Marks)

Question 2: Does the demand for firm 2âs product satisfy the law of demand? Briefly explain. Your answer must reference firm 2âs demand function. (2 Marks)

Question 3: What is the equation of firm 1âs best-response function? (4 Marks)

Question 4: What is the equation of firm 2âs best-response function? (4 Marks)

Question 5: Find the equilibrium prices. (2 Marks)

Question 6: Find the equilibrium profits. (3 Marks)

Question 7: Which firm enjoys the greater market power? (3 Marks)

ECON 101 Lecture Notes - Lecture 12: Monopolistic Competition, Becquerel, Nash Equilibrium

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