Four companies (Firm 1, 2, 3 and 4) are producing a product for the market. Each company will decide the number of products produced. You are given that · Each firm can choose its qi. - Given the quantites produced by four companies (denoted by 91, 92, 93, 94 respectively), the market price of the product is P = 400-91 92-93-94- Cost of producing one product is 20 (*Note: So the total cost for producing qi units of product is 20qi. • Firm 1 and Firm 2 will first decide the quantities produced simultaneously at the beginning. After knowing q₁ and 92, Firm 3 and Firm 4 will decide the quantities produced simultaneously. (a) State the strategic profiles of each firm. (b) Find all possible subgame perfect equilibrium for this games. Provide full justification to your answer.

Four companies (Firm 1, 2, 3 and 4) are producing a product for the market. Each company will decide the number of products produced. You are given that · Each firm can choose its qi. - Given the quantites produced by four companies (denoted by 91, 92, 93, 94 respectively), the market price of the product is P = 400-91 92-93-94- Cost of producing one product is 20 (*Note: So the total cost for producing qi units of product is 20qi. • Firm 1 and Firm 2 will first decide the quantities produced simultaneously at the beginning. After knowing q₁ and 92, Firm 3 and Firm 4 will decide the quantities produced simultaneously. (a) State the strategic profiles of each firm. (b) Find all possible subgame perfect equilibrium for this games. Provide full justification to your answer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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