workshop 6 - ECOS2201 - Economics of Competition and...

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Unformatted text preview: ECOS2201 - Economics of Competition and Strategy Workshop - 6 1. Two firms each have two strategies, high and low output. The payoffs are given in the matrix below. First payoff belongs to firm Row. Firm Column Low High 4, 4 1, 6 6, 1 2, 2 Firm Row Low High i. provide a rationale for these payoffs. ii. find the nash equilibrium of this game iii. if this game is played three times will cooperation result iv. If this game is repeated an infinite number of times, what must the interest rate be for cooperation to arise under the grim strategy? 2. Explain why cooperation is not an equilibrium outcome in a finitely repeated Cournot game, but it can be in an infinitely repeated Cournot game. 3. Let individual A have demand curve pA = 100 − qA and individual B have demand curve pB = 100 − 2qB . The monopolist’s marginal cost is constant and equal to c = 20. The monopolist price discriminates. (i) Find the profit maximising per-unit price for each individual (ii) verify the elasticity formula given in class 4. Let individual A have demand curve pA = 100 − qA and individual B have demand 2 curve pB = 50 − qB . The monopolist’s cost function is C (Q) = Q with marginal 4 cost C (Q) = Q . The monopolist price discriminates. 2 (i) Find the profit maximising per-unit price for each individual (ii) verify the elasticity formula given in class 1 ...
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This note was uploaded on 02/16/2010 for the course ECOS Economics taught by Professor None during the One '09 term at University of Sydney.

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