Question

Consider a Bertrand model, the pricing competition model. The market demand is P=200-Q. Consumers only buy...

Consider a Bertrand model, the pricing competition model. The market demand is P=200-Q. Consumers only buy from the firm charging the lower price. If the two firms charge the same price, they share the market equally. The marginal cost for firm 1 is 50, and the marginal cost for firm 2 is also 50. There is no fixed cost.

If firm 2 charges p2=130, then what price p1 will be firm 1’s best response

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider a Bertrand model, the pricing competition model. The market demand is P=200-Q. Consumers only buy...
Consider a Bertrand model, the pricing competition model. The market demand is P=200-Q. Consumers only buy from the firm charging a lower price. If the two firms charge the same price, they share the market equally. The marginal cost for firm 1 is 50, but the marginal cost for firm 2 is 40. There is no fixed cost. Find the social welfare (SW) at the equilibrium. A. None of the other answers are correct. B. SW is about 11250. C....
Consider the two firms engaging in the Bertrand competition. On the demand side the market demand...
Consider the two firms engaging in the Bertrand competition. On the demand side the market demand equation is p=200-Q. Consumers only buy from the firm charging the lower pric When charging the same price, they share the market equally. On the supply side, they have different marginal costs, with MC1=60 and MC2=50, and there is no fixed cost. Find the market price and the winner’s profit at the equilibrium. a. At the equilibrium the market price is 60 and the...
Two firms are involved in Bertrand competition. The marginal cost for firm 1 and 2 are...
Two firms are involved in Bertrand competition. The marginal cost for firm 1 and 2 are mc1=1 and mc2=0. As usual, the consumers purchase only from the firm with a lower price. If p1=p2, then each firm will sell to 50% of the consumers. Find any two Nash Equilibria of the game. And explain why they are Nash Equilibria.
Two firms, A and B, engage in Bertrand price competition in a market with inverse demand...
Two firms, A and B, engage in Bertrand price competition in a market with inverse demand given by p = 24 - Q. Assume both firms have marginal cost: cA = cB = 0. Whenever a firm undercuts the rival’s price, it has all the market. If a firm charges the same price as the rival, it has half of the market. If a firm charge more than the rival, it has zero market share. Suppose firms have capacity constraints...
Bertrand competition - asymmetric cost question Consider the Bertrand competition example in the lecture notes. P(Q)=31-2Q...
Bertrand competition - asymmetric cost question Consider the Bertrand competition example in the lecture notes. P(Q)=31-2Q , firm B’s cost function is CB(Q) = 2Q. Firm A’s cost function remains the same at CA(Q) = Q. Furthermore, constrain prices to be divisible only into cents. there is a discreteness imposed on the strategy choice. 1) Determine firm A’s best response function PˆA (PB). Argue your answer. 2) Determine firm B’s best response function PˆB (PA). Argue your answer. 3) What...
Recently, I've posted a question that goes as follows Two firms are involved in Bertrand competition....
Recently, I've posted a question that goes as follows Two firms are involved in Bertrand competition. The marginal cost for firm 1 and 2 are mc1=1 and mc2=0. As usual, the consumers purchase only from the firm with a lower price. If p1=p2, then each firm will sell to 50% of the consumers. Find any two Nash Equilibria of the game. And explain why they are Nash Equilibria. And the answer that I got went like this To find the...
There is a monoplolistic firm which knows that the market demand function is p = 1-q....
There is a monoplolistic firm which knows that the market demand function is p = 1-q. If the firm can set two prices p1, and p2 Find the p1, p2 the firms will set and also find the q1,q2 according to the prices. and Tell which price discrimination method that this pricing is the closest to.
. Two firms sell an identical product and engage in simultaneous-move price competition (i.e., Bertrand competition)....
. Two firms sell an identical product and engage in simultaneous-move price competition (i.e., Bertrand competition). Market demand is Q = 20 – P. Firm A has marginal cost of $1 per unit and firm B has marginal cost of $2 per unit. In equilibrium, firm A charges PA = $1.99(…) and firm B charges PB = $2.00 A clever UNC alum has patented a cost-saving process that can reduce marginal cost to zero. The UNC alum is willing to...
Consider a market with two identical firms. The market demand is P = 26 – 2Q,...
Consider a market with two identical firms. The market demand is P = 26 – 2Q, where Q = q1 + q2. MC1 = MC2 = 2. 1. Solve for output and price with collusion. 2. Solve for the Cournot-Nash equilibrium. 3. Now assume this market has a Stackelberg leader, Firm 1. Solve for the quantity, price, and profit for each firm. 4. Assume there is no product differentiation and the firms follow a Bertrand pricing model. Solve for the...
1. Consider a market with inverse demand P (Q) = 100 Q and two firms with...
1. Consider a market with inverse demand P (Q) = 100 Q and two firms with cost function C(q) = 20q. (A) Find the Stackelberg equilibrium outputs, price and total profits (with firm 1 as the leader). (B) Compare total profits, consumer surplus and social welfare under Stackelberg and Cournot (just say which is bigger). (C) Are the comparisons intuitively expected? 2. Consider the infinite repetition of the n-firm Bertrand game. Find the set of discount factors for which full...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT