Consider a Cournot duopoly operating in a market with inverse demand P (Q) = 100 - Q; where = 91 +92 is the aggregate quantity on the market. Firm 1 is an incumbent in the market, so its costs are common knowledge and are given by TC₁ 10q₁. Firm 2 is a new entrant to the industry, so its costs are firm 2's private information. However, it is common knowledge that firm 2's cost function could be TC₂ = 492 with probability or TC₂ = 1092 with probability. = a) True or false? The game defined above is a game of incomplete information. True or false? The game defined above is a game of symmetric information. b)The incumbent can be of (1 or 2) type(s) with probability (0,2, or 1) of each. The entrant can be of (1 or 2) type(s) with probability (0, 12, or 1) of each. c) Represent this game in extensive form. d) What is the Bayesian Nash equilibrium in this Cournot duopoly game?

Consider a Cournot duopoly operating in a market with inverse demand P (Q) = 100 - Q; where = 91 +92 is the aggregate quantity on the market. Firm 1 is an incumbent in the market, so its costs are common knowledge and are given by TC₁ 10q₁. Firm 2 is a new entrant to the industry, so its costs are firm 2's private information. However, it is common knowledge that firm 2's cost function could be TC₂ = 492 with probability or TC₂ = 1092 with probability. = a) True or false? The game defined above is a game of incomplete information. True or false? The game defined above is a game of symmetric information. b)The incumbent can be of (1 or 2) type(s) with probability (0,2, or 1) of each. The entrant can be of (1 or 2) type(s) with probability (0, 12, or 1) of each. c) Represent this game in extensive form. d) What is the Bayesian Nash equilibrium in this Cournot duopoly game?

Linear Algebra: A Modern Introduction

4th Edition

ISBN:9781285463247

Author:David Poole

Publisher:David Poole

Chapter2: Systems Of Linear Equations

Section2.4: Applications

Problem 27EQ

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