EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Question
Chapter 12, Problem 12.8P
a)
To determine
the firms make their choice of Enter or Don’t Enter using backward induction when fold the game back to the first period also write down the normal form (a 2 by 2 matrix) for this game.
b)
To determine
To Solve: the mixed-strategy Nash equilibrium of this game.
c)
To determine
To compare: the results from the mixed-strategy Nash equilibrium to the Bertrand Paradox.
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Students have asked these similar questions
Consider the following normal form representation of the standard competition between firm A and
firm B. Each firm can choose either standard A or standard B. Their payoffs are given as follows:
Firm B
A
В
A
Firm A
В
1
1
3
1
(1) (10 points) What's Nash equilibrium (NE) in this game? If there are more than one, find them
all. But there is no NE, state that there is no NE.
(2) (10 points) If you find a NE (or multiple Nash equilibria), is it (or are they) Pareto efficient?
Consider a Stackelberg duopoly:There are two firms in an industry with demand Q = 1 − Pd.The “leader” chooses a quantity qL to produce. The “follower” observes qL and chooses a quantity qF.Suppose now that the cost function is Ci(qi) = qi2 for i = L, F.
(a) Find the subgame perfect equilibrium.
(b) Compare the equilibrium you found with the Nash equilibrium if the game was simultaneous (i.e., Cournot competition). Is the Nash equilibrium of the Cournot game also a Nash equilibrium of the sequential game? Why or why not?
Consider a noncollusive duopoly model with both firms
supplying bottled drinking water. The marginal cost for
each firm is $1.50. The market demand is shown by the
figure on the right.
Let us assume that the two firms supplying bottled drinking
water are Firm A and Firm B. The price charged by Firm A
is denoted as PA and the price charged by Firm B is
denoted as PB-
Find the demand functions for each of the firms.
If PA S$5, then demand for Firm A's bottled drinking
water is:
thousand if PA PB
thousand if PA = PB
thousand if PA > PB
If PB ≤ $5, then demand for Firm B's bottled drinking
water is:
thousand if PB PA
Price
10-
9-
8-
7-
6-
5-
4-
3-
2-
1-
0-
0
0.5
1
Demand
2 2.5 3 3.5
1.5
Quantity (in thousands)
4
4.5
Chapter 12 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 12.2 - Prob. 1TTACh. 12.2 - Prob. 2TTACh. 12.2 - Prob. 1MQCh. 12.2 - Prob. 2MQCh. 12.2 - Prob. 1.1TTACh. 12.2 - Prob. 2.1TTACh. 12.2 - Prob. 1.1MQCh. 12.3 - Prob. 1MQCh. 12.3 - Prob. 2MQCh. 12.3 - Prob. 1TTA
Ch. 12.3 - Prob. 2TTACh. 12.3 - Prob. 1.1MQCh. 12.3 - Prob. 2.1MQCh. 12.3 - Prob. 1.1TTACh. 12.3 - Prob. 2.1TTACh. 12.4 - Prob. 1TTACh. 12.4 - Prob. 2TTACh. 12.5 - Prob. 1MQCh. 12.5 - Prob. 2MQCh. 12.5 - Prob. 1TTACh. 12.5 - Prob. 2TTACh. 12.6 - Prob. 1MQCh. 12.6 - Prob. 2MQCh. 12 - Prob. 1RQCh. 12 - Prob. 2RQCh. 12 - Prob. 3RQCh. 12 - Prob. 4RQCh. 12 - Prob. 5RQCh. 12 - Prob. 6RQCh. 12 - Prob. 7RQCh. 12 - Prob. 8RQCh. 12 - Prob. 9RQCh. 12 - Prob. 10RQCh. 12 - Prob. 12.1PCh. 12 - Prob. 12.2PCh. 12 - Prob. 12.3PCh. 12 - Prob. 12.4PCh. 12 - Prob. 12.5PCh. 12 - Prob. 12.6PCh. 12 - Prob. 12.7PCh. 12 - Prob. 12.8PCh. 12 - Prob. 12.9PCh. 12 - Prob. 12.10P
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