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Unformatted text preview: a,b,c > 0 and a > c . Suppose we expand the strategies to allow each rm to independently and simultaneously quote a price with the provision that it matches any low price. Show that the strategy prole in which each rm quotes the monopoly price is a Nash equilibrium. Is there any other Nash equilibrium? 3. Two rms are in the chocolate market. Each can choose to go for the high end of the market (high quality) or the low end (low quality). Resulting prots are given in the following table: Firm 1 Firm 2 High Low High 50, 50 100, 800 Low 900, 600-20, -30 1 a) How many Nash equilibria does the game have? Support your answer. b) How much would rm rm 1 need to oer rm 2 to persuade it to collude? Support your answer. 2...
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- Spring '10