(8) For each situation, solve whether collusion is sustainable using "trigger strategy" (infinitely repeated)- NOTE: For each of these exercises, you need to calculate {T, * cheat > collusion> punished and see if the incentive compatibility inequality (condition for collusion to occur as a Nash equilibrium) is satisfied. 8a) Stage Game is Bertrand with Homogeneous Product; cost same as before but overall demand is Q(P) = 375 – 15 P and given 8 =0.9 8b) Same as 4a) but given 8 = 0.5e 8c) Stage Game is Cournot; Joe and Sarah have a constant MC - P(Q) = 20 – 0.1 × Q where Q = Qjoe + Qsarah and given 8 =0.9 8d) Same as 4c) above but given 8 = 0.5 8e) Try 4c) and 4d) assuming Sarah's MC = $5 but Joe's MC = $8. They both collude on Sarah's Monopoly Output.

(8) For each situation, solve whether collusion is sustainable using "trigger strategy" (infinitely repeated)- NOTE: For each of these exercises, you need to calculate {T, * cheat > collusion> punished and see if the incentive compatibility inequality (condition for collusion to occur as a Nash equilibrium) is satisfied. 8a) Stage Game is Bertrand with Homogeneous Product; cost same as before but overall demand is Q(P) = 375 – 15 P and given 8 =0.9 8b) Same as 4a) but given 8 = 0.5e 8c) Stage Game is Cournot; Joe and Sarah have a constant MC - P(Q) = 20 – 0.1 × Q where Q = Qjoe + Qsarah and given 8 =0.9 8d) Same as 4c) above but given 8 = 0.5 8e) Try 4c) and 4d) assuming Sarah's MC = $5 but Joe's MC = $8. They both collude on Sarah's Monopoly Output.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.8P

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