Unformatted text preview: “ﬁttings tige- Econ 445
Summer 2010 Homework 3 Due Friday July 16th 1 Solve for all the Nash equilibria in the below game. Are there any dominant ,t strategies for any of the players? 4g
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I P NY“??? ‘ 2 Consider the Cournot duopoly model Where inverse demand is given by
P(Q) = a 7 M), where the aggregate quantity Q is simply q; + £12. Both
ﬁrms simultaneously choose quantities. Let both ﬁrms have cost function 0(0) = C(12-
a) What are the actions for each player? Strategies? 1)) Find each ﬁrm’s best response function, i.e. for ﬁrm i, ﬁnd q: = 33494) c) Using the deﬁnition of a Nash equilibrium and best response functions,
solve for the Nash equilibrium quantites. ...
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- Fall '08