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Unformatted text preview: 2. (Bertrand game) Suppose there are two identical Frms, labeled 1 and 2, producing identical prod-ucts at a constant marginal cost c = 5 . The Frms choose price p 1 and p 2 simultaneously. Because Frms products are identical, all sales go to the Frm with the lowest price. Sales are split evenly if p 1 = p 2 . (a) What is the Nash equilibrium in this game? 1...
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This note was uploaded on 02/06/2012 for the course ECON 101 taught by Professor Buddin during the Spring '08 term at UCLA.
- Spring '08