Maurice Tutor

(5)

$15/per page/Negotiable

About Maurice Tutor

Levels Tought:
Elementary,Middle School,High School,College,University,PHD

Expertise:
Algebra,Applied Sciences See all
Algebra,Applied Sciences,Biology,Calculus,Chemistry,Economics,English,Essay writing,Geography,Geology,Health & Medical,Physics,Science Hide all
Teaching Since: May 2017
Last Sign in: 407 Weeks Ago, 6 Days Ago
Questions Answered: 66690
Tutorials Posted: 66688

Education

  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

Experience

  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Management Posted 08 Feb 2018 My Price 8.00

identical marginal cost

Question 1:

Suppose that two firms produce differentiated products and compete in prices. As in class, the two firms

are located at two ends of a line one mile apart. Consumers are evenly distributed along the line.

The firms have identical marginal cost, $60.

Firm B produces a product with value $110 to consumers.

Firm A (located at 0 on the unit line) produces a higher quality product with value $120 to consumers.

The cost of travel are directly related to the distance a consumer travels to purchase a good. If a consumer

has to travel a mile to purchase a good, they incur a cost of $20. If they have to travel x fraction of a mile,

they incur a cost of $20x.

(a) Write down the expressions for how much a consumer at location d would value the products sold by

firms A and B, if they set prices Pa and Pb?

(b) Based on your expressions in (a), how much will be demanded from each firm if prices Pa and Pb are

set?

(c) What are the Nash equilibrium prices?

Question 2: Consider two firms selling identical products and competing in prices (Bertrand game). The
firms compete against each other in a repeated game.
Market demand is given by Q = 500 – P. Firms compete in prices and either face zero demand, half of
market demand or all of market demand depending on if their price is greater than, equal to, or less than
their competitor’s price. Marginal cost is constant and equal to 100.
Suppose that each firm sets the monopoly price if their competitor has never cheated.
If their competitor has cheated, the firm will play the Nash equilibrium in the next period and forever
more.
(a) If the discount factor is d = 80%, will the firms tacitly collude?
(b) Suppose in the previous problem the firms tacitly collude. When they are tacitly colluding, are they
are setting MR = MC? Briefly explain.
(c) Suppose that firms only chose prices every other period. Would that make it easier or harder for firms
to cooperate? Briefly explain.
(d) Finally, briefly explain the costs and benefits of a strategy that “forgives” a competitor for cheating
after a certain amount of time.

Answers

Maurice Tutor
(5)
Status NEW Posted 08 Feb 2018 10:02 PM My Price 8.00

Hel-----------lo -----------Sir-----------/Ma-----------dam-----------Tha-----------nk -----------You----------- fo-----------r u-----------sin-----------g o-----------ur -----------web-----------sit-----------e a-----------nd -----------acq-----------uis-----------iti-----------on -----------of -----------my -----------pos-----------ted----------- so-----------lut-----------ion-----------.Pl-----------eas-----------e p-----------ing----------- me----------- on-----------cha-----------t I----------- am----------- on-----------lin-----------e o-----------r i-----------nbo-----------x m-----------e a----------- me-----------ssa-----------ge -----------I w-----------ill----------- be-----------

Not Rated(0)