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(Solved) Lets say both firms have the same costs; i.e., a symmetric game.


Lets say both firms have the same costs; i.e., a symmetric game.

The demand for the total market is:

P= 130- Q

Q is the total market quantity and each firm's production (X1 + X2 ) total up to Q.

Each firm has the identical costs of:

10 *XI?; I=1,2

where $10 is both unit or average cost and also marginal cost of production.



a) What are the payoffs if both firms have equal market shares (ie, produce the same)?

b) Solve for Q=30,40,60.

c) Find the Nash Equilibrium's.

 


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Oct 15, 2019

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