Three firms are competing through prices (Bertrand competition). They are all selling the same products. The only difference is that the first two firms have a constant marginal cost equal to 2 while the third firm has a constant marginal cost equal to 5. In equilibrium the two firms with lower marginal cost will set their price just slightly below 5
Three firms are competing through prices (Bertrand competition). They are all selling the same products. The only difference is that the first two firms have a constant marginal cost equal to 2 while the third firm has a constant marginal cost equal to 5. In equilibrium the two firms with lower marginal cost will set their price just slightly below 5
Chapter15: Oligopoly And Strategic Behavior
Section: Chapter Questions
Problem 6P
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Three firms are competing through prices (Bertrand competition). They are all selling the same products. The only difference is that the first two firms have a constant marginal cost equal to 2 while the third firm has a constant marginal cost equal to 5. In equilibrium the two firms with lower marginal cost will set their price just slightly below 5
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