14. Let 7; (x;, x-i) denote the twice differentiable profit function for firm i as a function of the amountof a firm controls x; (price or quantity) and the amount of what the other firm controls x-i. Strategiccomplementarity:a. Means that> 0 for all i.b. Implies that the best-response functions in the space (;, x-i) are downward-sloping.c. Means that< 0 for all i..d. None of the above are correct answers.15. Which of the following statements is true?a. In the linear Cournot model with homogenous products the average Lerner index (weighted by marketshares) is proportional to the Herfindahl index.b. In the linear Bertrand model the Lerner index is proportional to the Herfindahl index.c. In the linear Cournot model with differentiated products, the Herfindahl index is an appropriate measureof market power since it captures the average markup in equilibrium.d. All of the above are correct answers.

Strategic complement is the concept in the game theory where 2 players mutually support each other.…

14. Let 7; (xi,x-i) denote the twice differentiable profit function for firm i as a function of the amount of a firm controls x; (price or quantity) and the amount of what the other firm controls x-i. Strategic complementarity: a. Means that 2 0 for all i. dx¿ðx-i b. Implies that the best-response functions in the space (xi, x-i) are downward-sloping. c. Means that Tii,P-i)< 0 for all ¿.. d. None of the above are correct answers.

14. Let 7; (xi,x-i) denote the twice differentiable profit function for firm i as a function of the amount of a firm controls x; (price or quantity) and the amount of what the other firm controls x-i. Strategic complementarity: a. Means that 2 0 for all i. dx¿ðx-i b. Implies that the best-response functions in the space (xi, x-i) are downward-sloping. c. Means that Tii,P-i)< 0 for all ¿.. d. None of the above are correct answers.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.4P

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