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Two identical firms have: MC = $1 and face a market demand function of: P = 6 – Q

Question # 00183229
Subject: Economics
Due on: 01/31/2016
Posted On: 01/31/2016 05:35 AM

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Two identical firms have: MC = $1 and face a market demand function of: P = 6 – Q. Thus, total quantity, Q = q1 + q2, the sum of what each firm produces, and profit (payoff) per firm (same for both), (pi)1 = (P – MC) x q1 = [(6 – Q) – 1] x q1 = [5 – (q1 + q2)] x q1
a) Cournot Duopoly: Each firm chooses a discrete quantity: 0, 1, 2, or 3. Present the game in matrix form, and find its pure strategy Nash equilibria. Are there any dominant or dominated strategies for either player?

b) Bertrand Duopoly: Each firm can choose any price. What is/are the Nash equilibrium/a?

Tags demand function market face firms identical firm quantity duopoly nash equilibriaare dominant form pure strategy dominated playerb whatisare equilibriuma price choose matrix bertrand strategies 3present total produces demandfunction market firms face profit payoff discrete identical chooses

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Two identical firms have: MC = $1 and face a market demand function of: P = 6 – Q

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Preview: both), xxxxx = xx – MC) x q1 = xxx – xx xxx 1] x q1 = xx – (q1 x q2)] x xxxx Cournot xxxxxxxx Each firm xxxxxxx a discrete xxxxxxxxx 0, xx xx or x Present the xxxx in matrix xxxxx and.....
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