9. Antitrust lawsCooperation among oligopolies runs counter to the public interest because it leads to underproduction and high prices. In an effort to bring resourceallocation closer to the social optimum, public officials attempt to force oligopolies to compete instead of cooperating.Consider the following scenario:Suppose that executives working for two different automobile manufacturers exchange emails in which they discuss jointly increasingprices for their latest hybrid electric SUVs.This illegal communication would violate which of the following laws?The Robinson-Patman Act of 1936The Clayton Act of 1914The Sherman Antitrust Act of 1890The Celler-Kefauver Act of 1950

The Sherman Antitrust Act of 1890, the Robinson-Patman Act of 1936, the Clayton Act of 1914, and the…

Answered: 9. Antitrust laws Cooperation among…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Two duopolists are sharing a market in which they are contemplating whether to compete or to cooperate. If they cooperate and behave like a monopolist they will share the monopolist profit of $1800. If they compete each will get a profit of $800 but if one them cooperates while the other chooses to compete the one who cooperates gets $700 while the one who competes will end up with $1000. Set-up the game, explain the process and show the Nash-equilibrium reached when the game is played.
Cournot Duopoly: Suppose two firms produce identical products and they have identical constant production costs. When these two firms secretly agree to collude, these firms need to their output level and their price. If the collusion is successful, each firm earns of the monopoly profit. a. Cut; raise; half b. Cut; raise; one-third c. Raise; cut; half d. Raise; cut; one-third
4) Which of the following companies is least likely to operate in an oligopoly? Burger King, which sells fast food Frontier, which provides Internet services AHF pharmacy Verizon, which provides cell phone coverage
Q5. A. Consider the following one period game between Yellow pages and a new competitor Spartan information. They earn revenues by charging businesses for their advertisement spaces. Their two strategies are: either charge a higher price (PH) or charge a lower price (PL) for advertising space. The payoffs from these strategies are provided for each firm. Is this a case of a prisoner's dilemma? Explain. Word limit: 100 words PH PL $20, $60 $40, $25 Рн $5, $70 PL $10, $45 Yellow Pages Spartan Info B. The local textile faces the faces the following supply curve for labor. Fill in the empty blanks. Wage rate per hour Units of labor Total Expenditure Marginal ($) supplied per hour Expenditure 4 10 40 NA 11 ? 12 ? ? 7 13 ? 8 14 ? ? The mill's demand curve for labor is a horizontal line at a wage of $17 per hour. How much labor will the mill demand? What will be the equilibrium wage rate?
8. Two firms, the only firms in the market, sell the same product and have the same marginal cost. They realise they would be better off if they didn't compete with each other. They enter an alternating offers bargaining game to decide how they will divide the monopoly profit, n. They have three periods to come to an agreement. If no agreement is reached after three periods, the firms will compete simultaneously in prices. The firms toss a coin to decide who makes the first offer in the bargaining game. Firm 1 wins and decides to go first. Each firm has a discount factor o. a) Draw the game tree. b) What is the subgame perfect equilibrium when 8 = 0.5? c) What is the equilibrium payoff for each firm? d) Was Firm 1 wise to opt to make the first offer? Explain your answer. %3D
QUESTION 13 Consider a market where two firms (1 and 2) produce differentiated goods and compete in prices. The demand for firm 1 is given by D₁(P₁, P2) = 140 - 2p1 + P2 and demand for firm 2's product is D2 (P1, P2) 140 - 2p2 + P1 Both firms have a constant marginal cost of 20. What is the Nash equilibrium price of firm 1? (Only give a full number; if necessary, round to the lower integer; no dollar sign.)
77
Assume that the market for oil is made up of two firms: Exxon Mobil and Chevron. Also assume that New England has dozens of breweries and each of these make beers with different tastes, colors, and aromas. Which of the following statements is true? The market structure for oil is an oligopoly, and the one for beer is monopolistic competition. The market structure for oil is monopolistic competition, and the one for beer is an oligopoly. The market structure for both oil and beer is an oligopoly. The market structure for both oil and beer is monopolistic competition.
2. Consider the following game: Soapy Inc. and Suddies Inc. are the only producers of soap powder. They collude and agree to share the market equally. If neither firm cheats on the agreement, each makes $1 million profit. If either firm cheats, the cheat makes a profit of $1.5 million, while the complier incurs a loss of $0.5 million. If both cheat, they break even. Neither firm can monitor the other's actions. a) Construct the payoff matrix. b) What is the dominant strategy? c) What is the nash equilibrium for this game?
8. Two firms, the only firms in the market, sell the same product and have the same marginal cost. They realise they would be better off if they didn't compete with each other. They enter an alternating offers bargaining game to decide how they will divide the monopoly profit, n. They have three periods to come to an agreement. If no agreement is reached after three periods, the firms will compete simultaneously in prices. The firms toss a coin to decide who makes the first offer in the bargaining game. Firm 1 wins and decides to go first. Each firm has a discount factor o. a) Draw the game tree. b) What is the subgame perfect equilibrium when o = 0.5? c) What is the equilibrium payoff for each firm? d) Was Firm 1 wise to opt to make the first offer? Explain your answer.
Suppose a duopoly market can be modeled as a prisoner’s dilemma. Which of the following statements is correct? Group of answer choices -At the equilibrium, firms produce less total output than if there was a monopoly. Consumers are better off than with a monopoly. -At the equilibrium, firms produce more total output than if there was a monopoly. Consumers are better off than with a monopoly. -At the equilibrium, firms produce the same total output as if there was a monopoly. Consumers are better off than with a monopoly. -At the equilibrium, firms produce more total output than if there was a monopoly. Consumers are worse off than with a monopoly. -At the equilibrium, firms produce the same total output as if there was a monopoly. Consumers are worse off than with a monopoly. -At the equilibrium, firms produce less total output than if there was a monopoly. Consumers are worse off than with a monopoly.

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