2. Now consider an actual Cournot game with two firms. For concreteness, let's take P(Y) = 13 - Y and symmetric cost functions C(yi) =
2. Now consider an actual Cournot game with two firms. For concreteness, let's take P(Y) = 13 - Y and symmetric cost functions C(yi) = yi. (a) Compute the NE of this Cournot game, (yl, yz). Compute profits for each firm in the NE. (b) Compute the monopoly output, y", and profit. (c) By joint monopoly, I mean the output profile in which each firm pro- duces half the amount you found in Question 2b. What is each firm's individual profit under joint monopoly? (This should be trivial.) If the other firm produces its half of joint monopoly output what output by you produces the most profit for you, and what is your profit? (d) Finally, consider the repeated version of this game. Find the minimum discount factor for which the joint monopoly is supported by Nash rever- sion in a subgame perfect Nash equilibrium. (Compute the minimum o to 2 places.)
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