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1) Write down the normal form of the following game. Note that it cannot be represented in a matrix. Firm 1 and Firm 2 simultaneously
1) Write down the normal form of the following game. Note that it cannot be represented in a matrix. Firm 1 and Firm 2 simultaneously set prices. Each may select as its price any real number between 0 and 32. Firm 1's product and Firm 2's product are imperfect substitutes - an increase in one firm's price will lead to an increase in demand for the other firm's product. In particular, each firm i=1,2 faces the following demand curve: qi=max{0,162pi+pi}, where qi is the quantity that firm i can sell when pi is its own price and pi is the other firm's price. Both firms have zero costs; both firms seek to maximize profit. 1) Write down the normal form of the following game. Note that it cannot be represented in a matrix. Firm 1 and Firm 2 simultaneously set prices. Each may select as its price any real number between 0 and 32. Firm 1's product and Firm 2's product are imperfect substitutes - an increase in one firm's price will lead to an increase in demand for the other firm's product. In particular, each firm i=1,2 faces the following demand curve: qi=max{0,162pi+pi}, where qi is the quantity that firm i can sell when pi is its own price and pi is the other firm's price. Both firms have zero costs; both firms seek to maximize profit
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