Coursenotes_ECON301

# In the sequential model when firm a is a stackelberg

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Unformatted text preview: e market for automobiles. Suppose Honda has the same ATC of 9,000 per unit and Toyota has the same ATC of \$11,000 per unit as in question 1. Assume the same market demand of: P = 54,000 QHONDA QTOYOTA Solve the Stackelberg leadership quantity competition to get Q*HONDA, Q*TOYOTA, and P* if Honda is the first mover. Also, find the equilibrium profits for each firm as *HONDA and *TOYOTA and compare this to the Cournot results. 3. Consider the same market for automobiles. Suppose Honda has the same ATC of 9,000 per unit and Toyota has the same ATC of \$11,000 per unit as in question 1. Assume the same market demand of: P = 54,000 QHONDA QTOYOTA Solve the Stackelberg leadership quantity competition to get Q*HONDA, Q*TOYOTA, and P* if Toyota is the first mover. Also, find the equilibrium profits for each firm as *HONDA and *TOYOTA and compare this to the Cournot results and the results from question 2. 293 ECON 301 LECTURE #17 GAME THEORY NON-COOPERATIVE GAME THEORY There are two broad approaches to decision problem analysis using game theory. The distinction lies between cooperative and non-cooperative games. This distinction does not mean that agents necessarily cooperate in cooperative game theory nor does it mean that agents necessarily do not cooperate in noncooperative game theory. What is the difference then? &quot;Cooperative&quot; means that the players can write binding contracts on their actions. For example, in cooperative game theory, players can commit to actions, which when they have to be taken, possibly end up being against that players interests at that point in time. For instance, a player may commit to becoming a member of a coalition that is bound via contract to behave a certain way in a given state of the world...once that state of the world presents itself (if it ever does) the coalition is obligated to act as they said they would, even if there are better payoffs from another course of action. By contrast, non-cooperative game theory promises no su...
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## This note was uploaded on 05/25/2010 for the course ECON 301 taught by Professor Sning during the Spring '10 term at University of Warsaw.

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