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Consider a variant version of the Bertrand model we learned in class. Two firms compete through price and the demand function is D(p) = 100
Consider a variant version of the Bertrand model we learned in class. Two firms
compete through price and the demand function is D(p) = 100 p when p < 100
and 0 when p 100. Each firm has the same constant marginal cost and 0 fixed
cost. Specifically the cost function for both firms is C(qi) = 10qi. Suppose the
price chosen by each firm can only be an integer. For example, a firm can choose
23 or 14 but not 15.3. Is (10; 10) still a Nash equilibrium of the game? Is there
any other Nash equilibrium?
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