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28 Sep 2019
Consider an industry with two firms (duopoly) that produce a homogenous product (same product). The two firms strategically choose their price (price is the choice variable, not quantity). Note, this is a Bertrand duopoly setting. Firm 1 has a cost function c1(q1)=25q1. and MC=25. and firm 2 has a cost function of C2(q2)=80+15q2 i.e. MC=15.The market demand is Q=100-p.
a. Use your knowledge of game theory to solve for the price charged in the market, the quantity produced by each firm, and the profit for each firm
Consider an industry with two firms (duopoly) that produce a homogenous product (same product). The two firms strategically choose their price (price is the choice variable, not quantity). Note, this is a Bertrand duopoly setting. Firm 1 has a cost function c1(q1)=25q1. and MC=25. and firm 2 has a cost function of C2(q2)=80+15q2 i.e. MC=15.The market demand is Q=100-p.
a. Use your knowledge of game theory to solve for the price charged in the market, the quantity produced by each firm, and the profit for each firm
Retselisitsoe PokothoaneLv10
28 Sep 2019
