Find the quantities that firm is selling – equilibrium price, Game Theory

1. Two firms, producing an identical good, engage in price competition. The cost functions are c1 (y1) = 1:17y1 and c2 (y2) = 1:19y2, correspondingly. The demand function is D (p) = 800 50p. The firm that charges the lowest price gets the entire demand, while, if prices are equal, each firm gets exactly one half of the total demand. Firms can only charge prices that correspond to denominations of Canadian dollars (i.e., prices change by one cent).

(a) Suggest an equilibrium pricing scenario (i.e., one price per firm). Given the prices you propose, find the quantities that each firm is selling, the total market quantity, and the corresponding profits. Justify why the prices you propose are equilibrium prices (by showing that NO firm wants to deviate from the prices you propose).

(b) Repeat part

(a) assuming that the Canadian economy run out of 1 cent and 5 cent coins (i.e., prices can change only in multiples of twenty-five cents).

Posted Date: 3/22/2013 6:39:00 AM | Location : United States







Related Discussions:- Find the quantities that firm is selling – equilibrium price, Assignment Help, Ask Question on Find the quantities that firm is selling – equilibrium price, Get Answer, Expert's Help, Find the quantities that firm is selling – equilibrium price Discussions

Write discussion on Find the quantities that firm is selling – equilibrium price
Your posts are moderated
Related Questions
About assignment The goal of this assignment is for the student to propose a new game of your own and to be able to present their ideas in clear and convincing manner. This pro

Eighteenth century British mathematician who recognized a method for probabilistic mathematical inference. His Bayes Theorem, published posthumously, treats probability as a logic.

Rules of Snake Eyes (small variation on game called Craps in USA) Player rolls two dice. On the first roll if the total of the dice is 2 (snake eyes): player wins and rece

Normal 0 false false false EN-US X-NONE X-NONE

Extraneous Estimates If some parameters are identified, while others are not and there exists information on their value from other (extraneous) sources, the researcher may pro

What is the Iterated Dominant Strategy Equilibrium (IDSE) and associated pay-offs? Type your answer in the following form: (c,B) , (6, 4) if you think the outcome is

A market mechanism in which a service, objects, or set of objects, is swapped on the basis of bids submitted by member. Auctions offer a precise set of rules that will rule the pur

Named when Vilfredo Pareto, Pareto optimality may be alive of potency. An outcome of a game is Pareto optimal if there's no different outcome that produces each player a minimum of

This condition is based on a counting rule of the variables included and excluded from the particular equation. It is a necessary but no sufficient condition for the identi

What do you study about the saving, investment spending and financial system? Savings, Investment Spending, and the Financial System: 1. The correlation between savings and