Consider a Cournot competition game. The market demand function is: p= 4 – q1 – q2, - - where p is price and q is firm i's output level. Suppose that the firm's marginal cost of production is: C1 = 1, c2 = 0, respectively. A) Find the Nash equilibrium of the above game.

Consider a Cournot competition game. The market demand function is: p= 4 – q1 – q2, - - where p is price and q is firm i's output level. Suppose that the firm's marginal cost of production is: C1 = 1, c2 = 0, respectively. A) Find the Nash equilibrium of the above game.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter15: Strategic Games

Section: Chapter Questions

Problem 15.3IP

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Question

Consider a Cournot competition game. The market demand
function is:
p = 4 – q1 – q2,
where p is price and q is firm i's output level. Suppose that the
firm's marginal cost of production is:
C1 = 1, c2 = 0,
respectively.
A) Find the Nash equilibrium of the above game.

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