Essay
Two firms produce identical products at zero cost, and they compete by setting prices.If each firm charges a low price, the both firms earn profits of zero.If each firm charges a high price, then each firm earns profits of $30.if one firm charges a high price and the other firm charges a low price, the firm that charges the lowest price earns profits of $50 and the firm charging the highest price earns profits of zero.
a.Which oligopoly model best describes this situation?
b.Write this game in normal form.
c.Suppose the game is infinitely repeated.Can the players sustain the "collusive outcome" as a Nash equilibrium if the interest rate if 50 percent? Explain.
Correct Answer:
Verified
a.The Bertrand model (Cournot and Stacke...View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Correct Answer:
Verified
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Q14: A coordination problem arises whenever there:<br>A) is
Q83: Which of the following is true?<br>A)A dominant
Q124: Consider the following innovation game.Firm A must
Q125: You are the manager of a firm
Q128: Which of the following represents Firm A's
Q129: Which of the following is not an
Q130: Consider the following information for a simultaneous
Q132: What are the pure Nash equilibrium strategies
Q133: Use the following information to answer question:<br>Suppose
Q136: You operate in a duopoly in which