How many firms will enter the market

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Consider the setting of in-text exercise 19.1 (page 714). If the fixed costs associated with being active in this market are $30,000 per year, how many firms will enter the market?

Exercise 19.1

Suppose Joe, Louie, and Rebecca compete in the Bertrand ready-mix concrete market described in Section 19.2. Show that in any Nash equilibrium, all sales must occur at a price of $40 (equal to marginal cost). Extend your argument to show that this statement will be true as long as two or more firms are competing in the market.

Reference no: EM131132306

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