Exercise 5bis: Collusion with asymmetric costs and Bertrand competition Two firms compete in a market for a homogeneous product. In this market there are N=1 consumers (the normalization N=1 eliminates one parameter); each consumer buys one unit if the price of the product does not exceed 10, and nothing otherwise. Consumers buy from the firm selling at the lowest price. Assume also that firm 1 has lower marginal costs: c1=0

Exercise 5bis: Collusion with asymmetric costs and Bertrand competition Two firms compete in a market for a homogeneous product. In this market there are N=1 consumers (the normalization N=1 eliminates one parameter); each consumer buys one unit if the price of the product does not exceed 10, and nothing otherwise. Consumers buy from the firm selling at the lowest price. Assume also that firm 1 has lower marginal costs: c1=0

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

Chapter16: Bargaining

Section: Chapter Questions

Problem 16.1IP

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