hw5a - n increases? 2. Assuming that there are 2 firms...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
ISyE 4803 – HW5 1. In class we looked at the case where 4 firms competed in an oligopoly (i.e., chose quantity each period) with the following structure: The unit production cost of each firm i is c and the market-demand function is given by: = = - = 4 1 0 , , ) ( i i q Q b a bQ a Q p a. Find the equilibrium order quantity (we did this for 2 firms in class…note that the solution of this simultaneous move game is known as a Cournot equilibrium). b. Compare the answer to a competitive market (i.e., where each firm is a price taker) and a monopoly (which would model complete collusion among the 4 firms). c. How does the comparison in b. change as
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: n increases? 2. Assuming that there are 2 firms only, repeat the results for problem 1 doing the following: a. Player 1 chooses her output quantity first. Player 2 observing player one then chooses his output quantity (note the solution of this sequential move game is known as a Stackelberg equilibrium). b. Players 1 and 2 move simultaneously, but choose price rather than output quantity (note that the solution to this game is known as a Bertrand equilibrium). 3. Compare the 2-firm profits made under Cournot, Stackelberg, and Bertrand....
View Full Document

This note was uploaded on 04/14/2009 for the course ISYE 4803 taught by Professor Staff during the Spring '08 term at Georgia Institute of Technology.

Ask a homework question - tutors are online