Two firms sell an identical product in a market by setting prices simultaneously. Consumers buy from the firm that offers the lower price; if the prices are identical, the firms split the demand. If p is the lowest price (in dollars), aggregate demand is Q = 200-2p. Suppose prices can only be set in increments of 1 cent. a. If each firm had unlimited capacity and a marginal cost of $15, what are all the Nash equilibria in this market?

Two firms sell an identical product in a market by setting prices simultaneously. Consumers buy from the firm that offers the lower price; if the prices are identical, the firms split the demand. If p is the lowest price (in dollars), aggregate demand is Q = 200-2p. Suppose prices can only be set in increments of 1 cent. a. If each firm had unlimited capacity and a marginal cost of $15, what are all the Nash equilibria in this market?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.3P

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