Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1) The market demand for a good is Q=120p in each of an infinite number of periods. There are two firms with zero average costs.

1) The market demand for a good is Q=120p in each of an infinite number of periods. There are two firms with zero average costs. The discount factor is 0.9.(Answer format is one numeric value.)

a)What is the present value of the profit earned by each firm if they collude?

b) What is the present value of the profit earned by each firm if they engage in Bertrand competition?

c) What is the present value of the profit earned by each firm if they engage in Cournot competition?

d) What is the net benefit from cheating if trigger strategies assume setting P=MC forever?

e) If the discount factor was 0.3 instead of 0.9, what would be the net benefit from cheating if trigger strategies assume setting P=MC forever?

All information i have is this

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Applied International Finance

Authors: Thomas J O'Brien

1st Edition

1606497340, 9781606497340

More Books

Students also viewed these Finance questions

Question

describe the key elements of work;

Answered: 1 week ago

Question

=+can you write alternative statements that are better?

Answered: 1 week ago