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.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter17: Making Decisions With Uncertainty

Section: Chapter Questions

Problem 1MC

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