(5) For each situation, solve for the Bertrand-Nash Equilibrium (differentiatedProduct).5a) Suppose Sarah's constant marginal cost is $5 but Joe's is $8Recall that in a Bertrand model with differentiated product, each supplier faceshis/her own demand:Qjoe = 100 – 10 Pjoe + 5 PsarahQsarah = 100 – 10 Psarah + 5 Pjoe5b) Suppose Joe and Sarah have the same cost functions as earlier (constant MC of$5) but asymmetric demand functionsQjoe = 100 – 10 Pjoe + 5 PsarahQsarah = 160 - 10 Psarah + 5 Pjoe

To calculate Bertrand - Nash equilibrium when there are different marginal costs:-…

(5) For each situation, solve for the Bertrand-Nash Equilibrium (differentiated Product). 5a) Suppose Sarah’s constant marginal cost is $5 but Joe's is $8 Recall that in a Bertrand model with differentiated product, each supplier faces his/her own demand: = 100 – 10 Pjoe + 5 Psarah Qsarah = 100 - 10 Psarah + 5 Pjoe 5b) Suppose Joe and Sarah have the same cost functions as earlier (constant MC of $5) but asymmetric demand functions Qjoe = 100 – 10 Pjoe + 5 Psarah Qsarah = 160 – 10 Psarah + 5 Pjoe

(5) For each situation, solve for the Bertrand-Nash Equilibrium (differentiated Product). 5a) Suppose Sarah’s constant marginal cost is $5 but Joe's is $8 Recall that in a Bertrand model with differentiated product, each supplier faces his/her own demand: = 100 – 10 Pjoe + 5 Psarah Qsarah = 100 - 10 Psarah + 5 Pjoe 5b) Suppose Joe and Sarah have the same cost functions as earlier (constant MC of $5) but asymmetric demand functions Qjoe = 100 – 10 Pjoe + 5 Psarah Qsarah = 160 – 10 Psarah + 5 Pjoe

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.4P

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