Game Theory

12.2 Coumot Revisited: Consider the Cournot duopoly model in which two rms, 1 and 2, simultaneously choose the quantities they supply, :3; and 41:. The price each will face is determined by the market demand function pm], q2) = a btql + qz]. Each rm has a probability ,u of having a marginal uni! cost of CL and a probability 1- ,u of having a marginal unit cost of CH. These probabilities are common knowledge, but the true type is revealed only to each rm individually. Solve for the Bayesian Nash equilibrium