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1. Draw a set of reaction functions such that in the Dixit model, the incumbent would install excess capacity and deter entry. What must you assume about the effect of an increase in a rival's output on marginal revenue?
2. (a) What is the equilibrium outcome in the Dixit model if q M > q V ? Why?
(b) Suppose entry is deterred in the Dixit model and ql > q M . Would the incumbent ever expand its capacity in the second stage? In particular, would an incumbent ever produce where MR1(q1, 0) = w?
The problem related to Economics and it is explore about how we can become more global without losing our different cultures and traditions.
Identify 4 threats caused by globalization. Explain how globalization affects the gross domestic product (GDP).Explain your thoughts on globalization in your own words (e.g., is it bad or good Why or why not Does it affect all countries).
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Demand functions in the multiplicative form are most common for all of the following reasons except:
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