subject
Business, 22.10.2019 19:00 star6097

Imagine a market setting with three firms. firms 2 and 3 are already operating as monopolists in two different industries (they are not competitors). firm 1 must decide whether to enter firm 2's industry and compete with firm 2, or enter firm 3's industry and thus compete with firm 3. production in firm 2's industry occurs at zero cost, while the cost of production in firm 3's industry is 2 per unit. demand in firm 2's industry is given by p = 9 – q, while demand in firm 3's industry is given by p' = 14 – q', where p and q denote price and total quantity in firm 2's industry and p' and q' denote price and total quantity in firm 3's industry. the firms interact as follows. first, firm 1 chooses between e2 and e3, where e2 means "enter firm 2's industry" and e3 means "enter firm 3's industry." this choice is observed by firms 2 and 3. then, if firm 1 chose e2, firms 1 and 2 compete as cournot duopolists, where they select quantities q1 and q2. in this case, firm 3 automatically gets the monopoly profit of 36 in its own industry. on the other hand, if firm 1 chose e3, then firms 1 and 3 compete as cournot duopolists, where they select quantities q1' and q3'. in this case, firm 2 automatically gets the monopoly profit of 20ΒΌ in its own industry. part a draw the game tree. part b calculate the subgame-perfect nash equilibrium of this game and report the subgame-perfect equilibrium quantities. in the equilibrium, does firm 1 enter firm 2's industry or firm 3's industry?

ansver
Answers: 2

Another question on Business

question
Business, 22.06.2019 07:30
Most states have licensing registration requirements for child care centers and family daycare homes. these usually include minimum standard for operation. which of the following would you most likely find required in a statement of state licensing standards for child care centers?
Answers: 2
question
Business, 22.06.2019 09:30
When you hire an independent contractor you don't have to pay the contractors what
Answers: 3
question
Business, 22.06.2019 09:50
Is exploiting a distinctive competence or improving efficiency for competitive advantage. (a) cooptation (b) coalition (c) competitive intelligence (d) competitive aggression (e) smoothing
Answers: 1
question
Business, 22.06.2019 17:30
The purchasing agent for a company that assembles and sells air-conditioning equipment in a latin american country noted that the cost of compressors has increased significantly each time they have been reordered. the company uses an eoq model to determine order size. what are the implications of this price escalation with respect to order size? what factors other than price must be taken into consideration?
Answers: 1
You know the right answer?
Imagine a market setting with three firms. firms 2 and 3 are already operating as monopolists in two...
Questions
question
English, 10.07.2019 18:10
Questions on the website: 13722359