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Value of A-1.6 2. [30 points] Two firms, one and two, produce a homogeneous good at zero marginal cost. Demand in each period is D

Value of A-1.6

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2. [30 points] Two firms, one and two, produce a homogeneous good at zero marginal cost. Demand in each period is D = 10A - 5p. Firms meet in the market repeatedly and expect to do so into the infinite future. They maximize present discounted profits. The discount factor is 6

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