Consider a Stackelberg duopoly in which firm 1 sets q, firm 2 observes y, and then choosesⒸa. Firm 1 chooses q, SMALLER than the static best response to q, because this moves total output closer to the monopoly output.b. Firm 1 chooses , LARGER than the static best response toOc. Firm 1 chooses q, LARGER than the static best response to ₂Odq, is a static best response to ₂because this moves total output closer to the monopoly outputbecause this results in a smaller q. 2

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Consider a Stackelberg duopoly in which firm 1 sets q. firm 2 observes q, and then chooses q a. Firm 1 chooses q, SMALLER than the static best response to q, because this moves total output closer to the monopoly output. Ob. Firm 1 chooses q, LARGER than the static best response to , because this moves total output closer to the monopoly output Ⓒc. Firm 1 chooses q, LARGER than the static best response to, because this results in a smaller Odq, is a static best response to ₂

Consider a Stackelberg duopoly in which firm 1 sets q. firm 2 observes q, and then chooses q a. Firm 1 chooses q, SMALLER than the static best response to q, because this moves total output closer to the monopoly output. Ob. Firm 1 chooses q, LARGER than the static best response to , because this moves total output closer to the monopoly output Ⓒc. Firm 1 chooses q, LARGER than the static best response to, because this results in a smaller Odq, is a static best response to ₂

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.4P

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