Assume there are two players in an oligopoly , playing repeated Cour n ot compet
ID: 2495725 • Letter: A
Question
Assume there are two players in an oligopoly, playing repeated Cournot competition (that is, they compete on quantity). The demand in each year is p= A-by. Each player has discount rate r. Find strategies that lead to a sub-game perfect equilibrium where the oligopolists each get half of the monopoly level profits. What restrictions, if any, are on r?(Hint: propose a strategy. Check that the strategy is a best response to itself. To do this you need to check what the best cheating strategy would
Assume there are two players in an oligopoly, playing repeated Cournot competition (that is, they compete on quantity). The demand in each year is p= A-by. Each player has discount rate r. Find strategies that lead to a sub-game perfect equilibrium where the oligopolists each get half of the monopoly level profits. What restrictions, if any, are on r?
(Hint: propose a strategy. Check that the strategy is a best response to itself. To do this you need to check what the best cheating strategy would
Assume there are two players in an oligopoly, playing repeated Cournot competition (that is, they compete on quantity). The demand in each year is p= A-by. Each player has discount rate r. Find strategies that lead to a sub-game perfect equilibrium where the oligopolists each get half of the monopoly level profits. What restrictions, if any, are on r?
(Hint: propose a strategy. Check that the strategy is a best response to itself. To do this you need to check what the best cheating strategy would
Explanation / Answer
they should produce maximum output and they should offer the product at r discount rate. then customes will turns towards this firm's products rather than other competitors products. here strtegy is producing more output and offering discount rate at a rate of r.