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Would like step by step solutions to these two questions (see attached picture) Thank you! 1) Consider the following extensive form game of coordination. Firms
Would like step by step solutions to these two questions (see attached picture)
Thank you!
1) Consider the following extensive form game of coordination. Firms 1 and 2 must choose between technologies A and B. Firm 1 prefers technology A while firm 2 prefers technology B, but the firms obtain value from coordination. The following extensive form represents the game: A1 2,1 Firm 2 Firm 1 A B1 0,0 A2 -0,0 B B2 1,2 Firm 2 Note that this game is not simultaneous. a) Find all the (pure strategy) Nash equilibria of this game b) Which outcomes satisfy the criterion of backward induction? c) Before Firm 2 makes its move, it sees a press release from firm 1 saying that it believes that the industry will converge to technology A. Would such a statement change the outcome of the game? 2) An industry consists of three firms with identical total cost functions C(q) = 18q + q2. Market demand is Q (P) = 150 - P. a) Find the Cournot-Nash equilibrium quantity, price and profits for this industry. b) Suppose a monopolist controlled the three firms. What would its cost function be? c) What would be this monopolist's quantity, price and profitsStep by Step Solution
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