Unformatted text preview: 1 ? What do you expect your competitor to choose for Q 2 ? What price P to you expect to exist in the market? (b) You play the game only once, as above, but, this time you must announce your decision before your competitor does. Will you choose the same quantity? If not, how much will you produce? (c) Now, instead of choosing output, you and your competitor each choose a price . Because the output is homogeneous, consumers will purchase from whoever offers the lowest price. Again, you will play this game only once, and the objective is to maximize your profit. Will you choose the price you expected to occur in (a)? If not, what is your choice of price P 1 ?...
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- Fall '04
- Economics, competitor, Sloan School of Management Massachusetts Institute of Technology