Suppose that Alpha Inc, Richardson Industries, and K-Tek are the only three firms interested in a plot of land on the outskirts of town. The lot is being auctioned by a second-price sealed bid auction Alpha values the lot at $16,500, Richardson at $18,000, and K-Tek at $12.500 Each bidding firm's consumer surplus is CS--P it wins the auction and 0 af it loses. The values are private. What is each bidder's optimal bid? Who wins the auction, and what price does that firm pay? Alpha's optimal bid is $. Richardson's optimal bid is S and K-Tek's is (Enter your responses as whole numbers)

Suppose that the following prisoner's dilemma game (stage game) is played repeatedly and players discount future payoffs with the common discount factor δ <1.  a)    Carefully specify the strategy spaces for both players, draw the extensive form game and find a subgame perfect Nash equilibrium when the stage game is played twice, and both players observe the outcome of the first play.

Assume that we have an entry situation like that in the Judo Economics example. There is an incumbent firm (I) and a new entrant (E). Now we will look at the outcome if the entrant is at a disadvantage. The incumbent has constant marginal costs of production of $100, while marginal costs for the entrant are $120 per unit. There are 100 identical buyers who are willing to pay $200 for the incumbent’s product, but only $160 to buy from the entrant. Any consumer can buy from the incumbent, but only those targeted by the entrant can buy from the entrant. Those consumers targeted by the entrant can choose to buy from the incumbent or the entrant and will choose the lowest price (with the incumbent winning ties). At the first move of the game the entrant decides how many consumers (N) to target and sets a single price (P) to those targeted consumers. The incumbent then sets a single price for all 100 consumers, deciding to defend the market or accommodate the new entrant. Consumers then…

Q² 4 PROBLEM (4) Firm A and Firm B with identical total costs TCA (QA) related goods and competing in prices (Bertrand competition), with demands: QA = 510 - 2PA + pв and Qв= 510 - 2pв+ pa, respectively. = and TCB (QB) Q² 4 are producing (a) Calculate the Bertrand-Nash equilibrium prices. (b) Calculate the prices they charge when A is the leader and sets its price first, anticipating B's best response and taking it into account (like in Stackelberg competition). (c) Calculate the prices they charge when they collude, in order to maximize sum of their profits.