Question 10 [10]

Search for the following article on Sabinet and then answer the questions:

Duopoly Competition for Rational Addicts

Author: Steven F Koch

Department of Economics, University of Pretoria

10.1. What is the primary concern addressed by the author in this article in terms of organisation models? (2)

10.2. Draw an illustrative diagram of the symmetric steady-state Nash equilibrium (an illustration of the stationary equilibrium) which the author has addressed and stated in the article. (4)

10.3. As per the author's endnotes, for which reason does he conclude in the article that a

steady-state Nash equilibrium concept is considered in his analysis? (4)