singleshot2_Presentation - Todays Agenda Escape From...

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1 1 Escape From Bertrand And other short term pricing considerations 3 Cornel University Today’s Agenda Escape from Bertrand Firm Heterogeneity Product Differentiation Capacity Constraints Leader/Follower Model (Sequential Game) Bertrand Cournot 4 Cornel University Firm Heterogeneity Two firms face different cost structures TC is TC 1 =10 q 1 , TC 2 =20 q 2 MC 1 =10, MC 2 =20 What is the NE? Suppose the true MC 1 =MC 2 =10, but firm 2 can “trick” firm 1 into thinking that MC 2 =20 What is the value of technology? 5 Cornel University Differentiated products: the linear city Two sellers at opposite ends of a “city.” Consumers are spread evenly along the whole line. Consumers incur a transportation cost to get to either seller A or seller B.
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2 6 Cornel University Examples of product differentiation Geographic Consumer tastes Switching costs Quality 7 Cornel University Differentiation Outcomes Low price does not steal the whole market
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This note was uploaded on 02/20/2009 for the course AEM 4240 taught by Professor Blalock,g. during the Fall '07 term at Cornell University (Engineering School).

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singleshot2_Presentation - Todays Agenda Escape From...

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