Consider a market in which there are two firms: A and B. Each firm produces a differentiated product and chooses its price Assume that each firm can set price equal to $60 or $70. The payoffs associated with each set of prices are shown If the firms choose price simultaneously, then the Nash equilibrium price for firm A If firm A chooses price first and can commit to that price, then firm A will Firm B's Price is set its price equal to $00 $70 OA. S60, S60 $2700 $2475 B. $70, $70 C. $70, S60 D. $60, $70 $60 $2700 $3375 Firm A's Price $3375 $3300 S70 $2475 $3300
Consider a market in which there are two firms: A and B. Each firm produces a differentiated product and chooses its price Assume that each firm can set price equal to $60 or $70. The payoffs associated with each set of prices are shown If the firms choose price simultaneously, then the Nash equilibrium price for firm A If firm A chooses price first and can commit to that price, then firm A will Firm B's Price is set its price equal to $00 $70 OA. S60, S60 $2700 $2475 B. $70, $70 C. $70, S60 D. $60, $70 $60 $2700 $3375 Firm A's Price $3375 $3300 S70 $2475 $3300
Chapter15: Imperfect Competition
Section: Chapter Questions
Problem 15.3P
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