lecture20full

lecture20full - (Cornout) 3 When competing on price, lowest...

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Recap 1 Static games of complete information 1 dominated strategies 2 Nash equilibria (mutually best responses) 3 Mixed strategies (in order to mix, need to be indifferent between two strategies) 2 Dynamic games of complete information 1 Nash equilibrium could have non-credible threats 2 Subgame Perfect Nash equilibrium rules out non-credible threats as best responses are needed in every subgame (including those that are not reached)
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Oligopoly 1 Both the firm and the firm’s competitors affect price 2 Firms either compete on price (Bertrand) or quantity
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Unformatted text preview: (Cornout) 3 When competing on price, lowest price rm takes all the demand 4 When competing on quantity, rms will all face the same price which is determined by how much they produce Bertran Suppose demand is given by x = A- p Two rms sell x , both have cost functions cx Bertrand with heterogenous costs Sequential Bertrand Cornout x 1 + x 2 = A- p Cornout 2 Cornout vs. Monopoly Cornout graph Cornout graph 2 Stackelberg Subgame perfect equilibrium Subgame perfect equilibrium 2 Stackelberg graph...
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This note was uploaded on 05/13/2010 for the course ECON 105D taught by Professor Cur during the Fall '09 term at Duke.

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lecture20full - (Cornout) 3 When competing on price, lowest...

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