6. Three oligopolists operate in a market with inverse demand given by P(Q) = a - Q, where Q = 9₁ +92 +93 and qi is the quantity produced by firm i. Each firm has a constant marginal cost of production, c, and no fixed cost. The firms choose their quantities as follows: (1) firm 1 chooses q₁ ≥ 0; (2) firms 2 and 3 observe q₁ and then simultaneously choose 92 and 93, respectively. What is the subgame-perfect outcome?

6. Three oligopolists operate in a market with inverse demand given by P(Q) = a - Q, where Q = 9₁ +92 +93 and qi is the quantity produced by firm i. Each firm has a constant marginal cost of production, c, and no fixed cost. The firms choose their quantities as follows: (1) firm 1 chooses q₁ ≥ 0; (2) firms 2 and 3 observe q₁ and then simultaneously choose 92 and 93, respectively. What is the subgame-perfect outcome?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.4P

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