The following are the demand and supply functions for three competing mobile phone models of different manufacturers. qa1 = 46 – 10p1 + 2p2 + 2p3 9.1 3 12р, — 16 Яаг 3 30 + 2p1 — 6р2 + 4рз Is2 = 6p2 – 22 q43 = 38 + 2p1 + 4p2 – 8p3 Is3 = 6p3 – 10 Using Gaussian Elimination Method determine whether there are prices which would bring the supply and demand levels into equilibrium for each of the three mobile phone models. If so, what are the equilibrium demand and supply quantities? You may get the three equations of market equilibrium condition by equating qa1 with qs1, q42 with q,2 and q43with q,3.
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Note: Gaussian Elimination Method
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- The soft drink industry is dominated by TCCC and PSC. The market is worth $6 billion. Each firm can decide whether to advertise, but advertising costs $1 billion to any firm undertaking it. Moreover, advertising will create only negligible new demand as the market is already saturated. So, for the purpose of this question, assume that the market remains at $6 billion regardless of advertising. If one firm advertises and the other does not, then the former captures the whole market. If both firms advertise, then TCCC captures 60% of the market and PSC captures 40% of the market, but the advertising must be paid for. If neither firm advertises, then the market is again split 60:40, with 60% going to TCCC and 40% to PSC. 1. Draw the payoff matrix for this game where each player’s payoff is equal to the value of market it captures less the cost of advertisement. 2. Do any of the firms have dominant strategies? If so, what are they? Is there a dominant strategy equilibrium? If so,…V5. You are the manager of Taurus Technologies, and your sole competitor is Spider Technologies. The two firms' products are viewed as identical by most consumers. The relevant cost functions are C(Qi) = 2Qi, and the inverse market demand curve for this unique product is given by P =290 - 3Q. Currently, you and your rival simultaneously (but independently) make production decisions, and the price you fetch for the product depends on the total amount produced by each firm. However, by making an unrecoverable fixed investment of $500, Taurus Technologies can bring its product to market before Spyder finalizes production plans. (Assume Taurus Technologies is the leader in this scenario.) What are your profits if you do not make investment? What are your profits if you do make investment? Instructions: Do not include the investment of $500 as part of your profit calculation. Should you invest the $500? no or yesYour pharmaceutical firm is seeking to open up new international markets by partnering with various local distributors. The different distributors within a country are stronger with different market segments (hospitals, retail pharmacies, etc.) but also have substantial overlap. a. In Egypt, you calculate that the annual value created by one distributor is $60 million per year, but would be $80 million if two distributors carried your product line. How much of the value can you expect to capture? b. Argentina also has two distributors with values similar to those in Egypt, but both are run by the government. How does this affect the amount you could capture? c. In Argentina, if you do not reach an agreement with the government distributors, you can set up a less efficient Internet-based distribution system that would generate $20 million in value to you. How does this affect the amount you could capture?
- Comment An HHI index of less than 1500 is considered as an competative market place , and If HHI index value is in range of 1500 to 2500 is considered as moderetly Concentrated.if the valuegoes above 2500 then the market place is highly Concentrated. So, In our All three years Value of HHI is above 2500 that shows in all three years that shows the there is very less competation in market or existence of very few players in all three years Are your conclusions in the HHI consistent with the five firm concentration in all cases? Give two reasons to support your answerSuppose the European Union (EU) is investigating a proposed merger between two of largest distillers of premium Scotch liquor. Based on estimates from the EU’s economists, these two firms have a combined market share of about two-thirds of all sales in the relevant market. The only remaining firm controls the other one-third of the market. Economists have estimated that the wholesale market price elasticity of demand for Scotch is −1.3 and the unit cost to produce and distribute the Scotch is 16.20 per liter. Using the available information, provide quantitative estimates of the pre- and post-merger prices for Scotch in the wholesale market. In your opinion, is the EU’s concern about the merger justified? Why or Why not?Your pharmaceutical firm is seeking to open up new international markets by partnering with various local distributors. The different distributors within a country are stronger with different market segments (hospitals, retail pharmacies, etc.) but also have substantial overlap. In Egypt, you calculate that the annual value created by one distributor is $120 million per year, but would be $160 million if two distributors carried your product line. Assuming a nonstrategic view of bargaining, you would expect to capture $__________ million of this deal. (Hint: The two distributors are independent of each other; therefore, you conduct separate negotiations with each.) Argentina also has two distributors that add value equivalent to the value added by the two distributors in Egypt, but both are run by the government. Assuming a nonstrategic view of bargaining, you would expect to capture $__________ million of this deal. In Argentina, if you do not reach an…
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