Question
Answer it if you are 100% sure Consider a Stackelberg game with uncertainty. Two firms compete in quantities. Firm A chooses q1 first; firm B
Answer it if you are 100% sure
Consider a Stackelberg game with uncertainty. Two firms compete in quantities. Firm A chooses q1 first; firm B chooses q2 after observing the value of q1. The market price is given by P(q1,q2)=400q1q2. Firm A's total cost function is C1(q1)=q12 and this is publicly known to both firms. Firm B's total cost function is
C2(q2)=10q2 with probability 0.2,
C2(q2)=7q2 with probability 0.3,
C2(q2)=2q2 with probability 0.5.
Firm B knows its actual total cost function but firm A doesn't.
Find the perfect Bayesian equilibrium of this game
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