lecture21full

Lecture21full - response functions Cornout vs Monopoly Cornout graph Cornout graph 2 Stackelberg Subgame perfect equilibrium Stackelberg graph

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Recap Duopoly 1 Bertrand competition Firms simultaneously choose price, lowest price captures all the demand Low cost producer chooses price just below high cost producer’s marginal cost Sequential Bertrand: lots of SPNE when high cost producer chooses first 2 Cornout competition Firms simultaneously choose quantities, choice of both quantities affect the price Derived choice of x 1 as a function of the choice of x 2 (best response function) Nash Equilibrium was found at the intersection of best
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Unformatted text preview: response functions Cornout vs. Monopoly Cornout graph Cornout graph 2 Stackelberg Subgame perfect equilibrium Stackelberg graph Finitely repeated games New SPNE Infinitely repeated games With finitely repeated games, constrained by having to play a NE to the stage game in the last period. With infinitely repeated games, there is no last period. Going to play the stage game forever but discount the future at rate δ . Another SPNE Yet another SPNE...
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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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Lecture21full - response functions Cornout vs Monopoly Cornout graph Cornout graph 2 Stackelberg Subgame perfect equilibrium Stackelberg graph

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