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Two firms, 1 and 2 produce a homogeneous good. Firms have no fixed cost and produce at constant marginal cost of 10. By 1 and
Two firms, 1 and 2 produce a homogeneous good.
Firms have no fixed cost and produce at constant marginal cost of 10.
By 1 and 2 we denote the quantities produced, respectively, by firm 1 and 2.
The inverse demand function is P(Q) = 200 - Q by probability 2 3 and P(Q) = 200 - 2Q by probability 1 3 , where Q = 1 + 2.
Firms 1 and 2 simultaneously choose the quantities to produce.
Firm 1 knows if the demand is high or low but firm 2 does not.
Find the Bayesian Nash equilibria of the game.
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