PROBLEM (4) Firm A and Firm B with identical total costs TCA (QA) = 2 and TCB(QB): related goods and competing in prices (Bertrand competition), with demands: QA=510-2pA+ pв and Qв= 510 - 2рB+ PA, respectively. = are producing (a) Calculate the Bertrand-Nash equilibrium prices. (b) Calculate the prices they charge when A is the leader and sets its price first, anticipating B's best response and taking it into account (like in Stackelberg competition). (c) Calculate the prices they charge when they collude, in order to maximize sum of their profits.
PROBLEM (4) Firm A and Firm B with identical total costs TCA (QA) = 2 and TCB(QB): related goods and competing in prices (Bertrand competition), with demands: QA=510-2pA+ pв and Qв= 510 - 2рB+ PA, respectively. = are producing (a) Calculate the Bertrand-Nash equilibrium prices. (b) Calculate the prices they charge when A is the leader and sets its price first, anticipating B's best response and taking it into account (like in Stackelberg competition). (c) Calculate the prices they charge when they collude, in order to maximize sum of their profits.
Chapter15: Imperfect Competition
Section: Chapter Questions
Problem 15.4P
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