Suppose there are two restaurants selling pizzas on the same block, Tominos and Huts, and they are competing with each other following the rules of the Cournot Oligopoly Model Suppose inverse market demand for pizzas is p 600 Q Suppose Tominos has a cost function C( q t ) q 2 t and Huts has a cost function C( q h ) 9 q h Now suppose that instead of competing on quantities, the two restaurants are competing by setting prices following the Bertrand Oligopoly Model Assume both restaurants have MC $5 and total market demand for pizzas is 1000 What is the Nash Bertrand equilibrium in this market What would the Nash Bertrand equilibrium in this market be if Tominos has a marginal cost of $5 and Huts has a marginal cost of $4 per pizza, assuming no fixed costs What are two ways this Nash Bertrand equilibrium is inconsistent with real oligopoly markets Now suppose that the two restaurants use advertising to differentiate their products The marginal cost for each restaurant stays the same at $5 for both Suppose Tominos faces a demand function of q t 1000 10 p t 10 p h Suppose Huts faces a demand function of q h 1000 5 p h 10 p t What is the Nash Bertrand equilibrium now

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Suppose there are two restaurants selling pizzas on the same block, Tominos and Huts, and they are competing with each other following the rules of

Suppose there are two restaurants selling pizzas on the same block, Tominos and Huts, and they are competing with each other following the rules of the Cournot Oligopoly Model. Suppose inverse market demand for pizzas is p = 600 - Q. Suppose Tominos has a cost function C( q_t) = q²_tand Huts has a cost function C( q_h) = 9q_h.

Now suppose that instead of competing on quantities, the two restaurants are competing by setting prices following the Bertrand Oligopoly Model. Assume both restaurants have MC = $5 and total market demand for pizzas is 1000.

What is the Nash - Bertrand equilibrium in this market?
What would the Nash - Bertrand equilibrium in this market be if Tominos has a marginal cost of $5 and Huts has a marginal cost of $4 per pizza, assuming no fixed costs?
What are two ways this Nash - Bertrand equilibrium is inconsistent with real oligopoly markets?

Now suppose that the two restaurants use advertising to differentiate their products. The marginal cost for each restaurant stays the same at $5 for both. Suppose Tominos faces a demand function of q_t = 1000 - 10p_t + 10p_h. Suppose Huts faces a demand function of q_h = 1000 - 5p_h + 10p_t.