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Repeated games and collusion
a) What is the discount factor in the repeated game model? What are the 4 factors which determine that magnitude of the discount factor? Briefly explain why the discount factor has to be sufficiently high in order make collusion feasible.
b) Use the repeated game model to explain why collusion is more likely if there are few firms or there is multi-market contact.
c) In 1918 the U.S. congress passed a law allowing American firms to form export cartels. Empirical evidence suggests that cartels were more likely to be formed in industries where American exporters had a large market share, in capital-intensive industries, in industries selling standardized goods, and in industries that enjoyed strong export growth. Explain.
Explain why it is important for a business to estimate the price elasticity of demand for its product?
Use the supply and demand analysis of the market for reserves to explain how primary credit facility puts a ceiling on the federal funds rate and how interest on excess reserves puts a floor on the federal funds rate. (Use Graph)
Explain how and why each of the following factors would influence current aggregate in Canada 1) rapid growth of real income in Japan and Western Europe 2) An increase in income taxes
As per the mathematical laws that govern the relationship between average total cost and marginal cost, where must these two curves intersect.
What is a call option for a stock? Suppose the current stock price is $40, and the strike (or exercise) price of the call option is $35. Is the stock option in the money or out of the money? What is the intrinsic value of this call option?
If a pharmaceutical company knows that one of its products has a dangerous side effect, but does not disclose that to its customers, then the market for that product is likely to fail due to:
q1. determine whether the justice department would challenge a merger between two firms in an industry with 10
Consider a pollution problem involving a paper mill located on a river and a commercial salmon fishery operating on the same river. The fishery can operate at one of two locations: upstream (above the mill) or downstream (in the polluted part of the ..
Country A can produce either 10X and 0Y or 0x and 20Y. Country B can produce either 30X and 0Y or 0X and 40Y. Identify the opportunity cost of producing each good for each country. Identify the comparative advantage of each country
Find ticket price that maximizes revenue. Find profit-maximizing expenditure on players and profit-maximizing fraction of games to win.
q.in this problem we consider the differences between the competitive monopoly and cournot equilibria under the same
Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 6%. You hold the bond for five years before selling it. a. If the bond's yield to maturity is 6% when you sell it, what is the internal rate of return of your investment?
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