Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
In the 1920’s, General Motors purchased its auto bodies from an independent firm, Fisher Body. GM decided to build a new plant and, in order to improve the reliability of supply and also to decrease shipping costs, GM asked Fisher Body to build a new auto body plant adjacent to GM’s new assembly plant. Fisher refused. We’ll explore why using a simple dynamic game. Suppose the new investment cost $2 (in millions) and would create potential gains from trade of $4 between GM and Fisher (not including the investment cost). Once the investment has been made, it is a sunk cost, so the $4 in GFT after the investment has been made is up for grabs. GM, player 2, can be a Tough Bargainer (TB) or a Fair Bargainer (FB), as illustrated in Figure 2.
(a) Find the subgame perfect Nash equilibria by backward induction. Use your solution to explain the “holdup problem” that Fisher Body faced.
(b) The possibility of an underdevelopment trap: One solution to the holdup problem is vertical integration (e.g., eventually GM purchased Fisher Body). But sometimes this is impossible. Suppose now that player 1 is a rich country considering making direct foreign investment in an underdeveloped country (player 2). Use the holdup problem to explain why the poor country may remain underdeveloped.
A firm produces both crayons and pencils in constant proportions (1/3 and 2/3 respectively). Its costs are C(q1;q2)=1000+10q1+5q2+9q1q2, where q1 is the output of crayons and q2 the output of pencils. Calculate its minimum efficient scale (MES) of pr..
Imagine that our representatives in Congress have concluded that the economy needs the stimulus of additional government spending, but they have spent several months haggling over what type of spending will be authorized. This is an example of a(n)
Many factors affect the demand for a product, which is a concern for management and the decision-making process. To correctly assess the demand for their products, managers must determine the effect of all relevant variables. Discuss how these variab..
Crew Brew of Wisconsin plans to build a microbrewery on a small stream in that state. After sampling water from the stream, Chris Pierson has found that it is contaminated with pulp and paper waste from a local paper mill.
What should happen to the extraction (usage) rate of iron ore when. There are two general methods that governments use to sell mineral rights to the private sector. One is production royalties where the private firm promises to pay a certain amount ..
Suppose that there is limited commitment in the credit market, but lenders are uncertain about the value of collateral. Each consumer has a quantity of collateral H, but from the point of view of lender, there is a probability a that the collateral w..
Discuss how accounting costs and economic costs differ. Illustrate how total profits change as output expands. Describe how the profit-maximizing rate of output is found.
An economy has $72, to divide between Hamlet and Ophelia. Hamlet has the utility function u[H] = U[H] (m[H]) = 3m[H], where m[H] denotes his quantity of money. Ophelia has the utility function u[O]= U[O](m[O]) = 42sqrt(m[O]), where m[O] denotes her q..
A firm producing batteries is letting the acid leak into a local river. Each ounce of acid in the river causes $50 of damage to a downstream oyster farm. Graph the market for batteries, with a demand curve of P= −Q + 200 and private supply curve of P..
if demand is perfectly elastic the demand curve is horizontal. if demand for x shifts right as the price of good y increases, then x and y are substitutes. supply shifts rightward if input prices rise. it is possible for an economy to be inside its p..
It rains so much in the country of Tropicana that capital equipment rusts out (depreciates) at a much faster rate than it does in the country of Sahara. If the countries are otherwise identical, in which country will the Golden Rule level of capital ..
q.a friend of yours is considering two cell phones service providers. provider a charges 120 per month for the service
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd