Question
All questions are about the game theory Bertrandt Competition, please give explanations! Thank you! Consider the following duopoly market The firms produce a differentiated good.
All questions are about the game theory Bertrandt Competition, please give explanations! Thank you!
Consider the following duopoly market The firms produce a differentiated good. The demand for goodiisqi=8pi+0.5pj , and each firmihas the following total cost function:TC(qi)=4qi .In this market, both firms simultaneously choose the price.
1) What is the best response function for firm 1?
2) What is the best response price of firm 2, given that firm 1 has the price equal to 4?
3) What is the Nash Equilibrium for this game?
4) Given that this game is in Nash Equilibrium, what is the quantity produced by firm 2?
5) Firm 1 chooses the price equal to 8. Firm 2 plays the best response. What is the quantity produced by firm 2?
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