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Ma Consider a Bertrand duopoly with capacity constraint: demand curve is Q(P)=900500P. The firms have identical marginal cost and capacity, mc1=mc2=0.3,K1=K2=400. a Write down the
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Consider a Bertrand duopoly with capacity constraint: demand curve is Q(P)=900500P. The firms have identical marginal cost and capacity, mc1=mc2=0.3,K1=K2=400. a Write down the aggregate profit function of firm 1. b Derive the best response function of firm 1. c Draw the best response function of both firms. d Assume firm 2 has no capacity constraint, K2=. Repeat a to c. Consider a Bertrand duopoly with capacity constraint: demand curve is Q(P)=900500P. The firms have identical marginal cost and capacity, mc1=mc2=0.3,K1=K2=400. a Write down the aggregate profit function of firm 1. b Derive the best response function of firm 1. c Draw the best response function of both firms. d Assume firm 2 has no capacity constraint, K2=. Repeat a to c
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