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In the Stackelberg model, the firm that sets output first has an advantage. Explain
why using your own words.
Introduction
According to the Stackelberg leadership model, each firm in the game moves in turn the leader firm moves first, followed by the followers in a strategic game of economics. The term "Stackelberg competition" refers to an oligopolistic industry model that relies on a non-cooperative game in which one firm, known as the "leader," moves first and chooses how much to create, while all other firms, known as the "followers," choose how much to produce later.
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- Explain, using graphs, how the equilibrium in an industry in the Krugman's model changes when the size of the market increases (perhaps by economic integration).In a Cournot model, firms Go and Stop compete by producing good X. Demand is X = 50 - 0.5P, where P is price. The two firms have zero cost. If firm Go believes that firm Stop will produce 20 units, then firm Go's optimal reaction is produce _____ units Please do it fast ASAP .... FastThis pertains to the Cournot model except that a. Both firms maximize profit b. Each firm anticipates the price movement of the other c. There are only 2 firms in the industry d. Each firm takes the output as given
- Consider a market with four firms. Firms A and B have a marginal cost of $7. Firm C has a marginal cost of $11. Firm D has a marginal cost of $5. What occurs if the firms compete in the Bertrand model? Group of answer choices None of the other answers are correct. Firm D will capture the entire market with a price of $6.99. All four firms will each have one quarter of the market with a price of $11. Firms A and B will each have half the market with a price of $7.00. Firm D will capture the entire market with a price of $5.00.In the Bertrand model, suppose that each firm has a marginal cost of £5 and that firm 1 sets a price of £5, which of the following a best-response for firm 2? Click all the correct answers. £5.00 £4.98 £4.99 £5.20 £5.01Assume the market for a product can be described as a Cournot duopoly with two identical firms. The Nash-equilibrium in this market is that the two firms produce the same quantity. Hence, they will have identical market shares, each will have 50%. Assume that firm 1 decides to invest in a technology that reduces its marginal costs. a) What will happen to the two firms market shares? You must explain how you find the answer. b) What will happen to total production and the price of the product? Again, explain your answer.
- Consider a "Betrand price competition model" between two profit maximizing widget producers say A and B. The marginal cost of producing a widget is 4 for each producer. Each widget producer has a capacity constraint to produce only 5 widgets. There are 8 identical individuals who demand 1 widget only, and individuals value each widget at 6. If the firms are maximizing profits, then which of the following statement is true: a) Firm A and Firm B will charge 4 b) Firm A and Firm B will charge 6 c) Firm A and Firm B will charge greater than or equal to 5 d) None of the options are correct. Explain clearly.This is a Microeconomics problem. Two firms A and B operating in the same market must choose between a collude price and a cheat price. Answer the following questions in order. (a) Does Firm A have a dominant strategy? Explain your answer. (b) Does Firm B have a dominant strategy? Explain your answer. (c) Is there an equilibrium solution to the above game? (d) Is this equilibrium solution to the game the most "ideal" outcome for the players? Explain clearly why or why not.Nash equilibrium can be defined as the competitive outcome where _____A. all firms set prices equal to average cost and all firms make economic profit.B. each firm sets a price equal to marginal cost and each firm makeseconomic profit.C. each firm sets a price higher than marginal cost and each firm makeseconomic profit.D. each firm sets a price lower than marginal cost and each firm makeseconomic profit.E. firms set a price lower than average cost and all firms make economic profit.
- Two firms commercialize two products that they both compete for. Each firm currently has 50 % of the market share. As the two products have been recently improved, both firms are planning to launch an advertising campaign. If neither firm advertises, their market share remains the same. If one of them launches a more powerful advertising campaign, the other loses a proportional percentage of its customers. Market research indicates that it is feasible to reach 50 % of potential customers by TV, 30 % through the press and 20 % on the radio. a. Develop the payoff matrix b. Indicate the most appropriate advertising strategy for both firms c. Determine the game valueWhy oligopoly firm earns abnormal profit in the long run, while a competitive firm earns normal profit only?Profits for two competing firms depend on the decisions to advertise or not to advertise as follows: If neither firm advertises, each makes a weekly profit of $100. If one firm advertises while the other does not, the firm that advertises makes $120 while the firm that doesn’t advertise makes $60. If both firms advertise, each firm makes $80. (a) What is the Nash equilibrium? Is this outcome efficient, from the perspective of the two firms? (b) How does the outcome of the game change if the parties can make a binding agreement in advance about advertising practices? (c) How does the game change if it is repeated over the course of many weeks (but the firms cannot make a binding agreement about how much advertising they will do)?