Consider the Cournot Duopoly game with the following characteristics: 2-player game (two firms, 1 and 2). Simultaneous and Independent. • Payoffs are the profits of the companies. • Both firms selecting their quantities to produce in a market. • Market price given by: p = 106 - 2q1 - 292 • Cost functions of both firms given by: 10q₁ and 1092 Assume that this game is repeated for infinite periods. If both firms decided to collude and coordinate their efforts in this game splitting the profits equally. What would be their payoff for the entire game? In other words: What is the sum of payoffs for all the periods. Assume a discount equals to 1/2
Consider the Cournot Duopoly game with the following characteristics: 2-player game (two firms, 1 and 2). Simultaneous and Independent. • Payoffs are the profits of the companies. • Both firms selecting their quantities to produce in a market. • Market price given by: p = 106 - 2q1 - 292 • Cost functions of both firms given by: 10q₁ and 1092 Assume that this game is repeated for infinite periods. If both firms decided to collude and coordinate their efforts in this game splitting the profits equally. What would be their payoff for the entire game? In other words: What is the sum of payoffs for all the periods. Assume a discount equals to 1/2
Chapter8: Game Theory
Section: Chapter Questions
Problem 8.1P
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