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2. Consider the Cournot duopoly model in which two firms, 1 and 2, s.pdf

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2. Consider the Cournot duopoly model in which two firms, 1 and 2, simultaneously choose the quantities they supply, q1 and q2. The price each will face is determined by the market demand function p(q1 , q2 ) = 3 1/4 (q1 + q2 ). Each firm has a probability 1/2 of having a marginal unit cost of cL = 1 and a probability 1/2 of having a marginal unit cost of cH = 2. These probabilities are common knowledge, but the true type is revealed only to each firm individually. Solve for the Bayesian Nash equilibrium..

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2. Consider the Cournot duopoly model in which two firms, 1 and 2, simultaneously choose the quantities they supply, q1 and q2. The price each will face is determined by the market demand function p(q1 , q2 ) = 3 1/4 (q1 + q2 ). Each firm has a probability 1/2 of having a marginal unit cost of cL = 1 and a probability 1/2 of having a marginal unit cost of cH = 2. These probabilities are common knowledge, but the true type is revealed only to each firm individually. Solve for the Bayesian Nash equilibrium.

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2. Consider the Cournot duopoly model in which two firms, 1 and 2, s.pdf

  • 1. 2. Consider the Cournot duopoly model in which two firms, 1 and 2, simultaneously choose the quantities they supply, q1 and q2. The price each will face is determined by the market demand function p(q1 , q2 ) = 3 1/4 (q1 + q2 ). Each firm has a probability 1/2 of having a marginal unit cost of cL = 1 and a probability 1/2 of having a marginal unit cost of cH = 2. These probabilities are common knowledge, but the true type is revealed only to each firm individually. Solve for the Bayesian Nash equilibrium.