Equilibria than continuous pricing, Managerial Economics

Two firms are engaged in Bertrand competition. Both firms have a stable marginal cost of €7. Presently, every firm is allocated half the market. There are 10,000 people in the population and every of them are willing to pay at most €12 for one unit of the good. Further, consumers can Only purchase one unit of the good and it costs every of them ? to switch from one firm to another. Suppose that there is perfect information in this market, which means that customers know what prices are being charged. Law or custom restricts the firms to charging whole amounts (e.g., they can charge €8, but not €8.50).

a) Suppose that switching costs are zero. What are the Nash equilibria of this model? Why does discrete pricing result in more equilibria than continuous pricing?

 

Posted Date: 3/26/2013 5:41:58 AM | Location : United States







Related Discussions:- Equilibria than continuous pricing, Assignment Help, Ask Question on Equilibria than continuous pricing, Get Answer, Expert's Help, Equilibria than continuous pricing Discussions

Write discussion on Equilibria than continuous pricing
Your posts are moderated
Related Questions
Collective bargaining Collective bargaining  refers to the whole process by which trade unions and employers (or their representatives) arrive at an enforce agreements.  Tra

Desire for a commodity This validates that a want or a desire doesn't develop into a demand except it is supported by the ability and willingness to acquire it. For example, a

Calculate point elasticity of demand for demand function Q=10-2p for decrease in price from Rs 3 to Rs 2

Q. What do you mean by Kinked Isoquant? This isoquant presumes only limited substitutability of labour andcapital. There are just a few processes for generating any one commodi


Direct intervention   The government can also intervene directly in the economy to see that its wishes are carried out.  This can be achieved thorough: a.     Price and i

Q. Evaluate Total Cost - Fixed and Variable ? Total cost (TC) of the firm is a function of output (q). It would increase with the increase in output, which is, it differs dire


Give some examples for marginal and incremental principle

Theory of consumer behaviour The role of customers in an economy is of significant importance because consumers spend most of their incomes on services and goods produced by fi