Three firms share a market. The demand function is P(q1, 92, 93) = 10 – q1 – 92 – 93, where q; is the output of firm i, Player i. The marginal cost per unit for each firm is zero. Suppose firm 1 is a market leader, and that firm 2, and firm 3 choose q2 and q3 simultaneously after observing q1 Find the SPE of this game. How much is produced by firm 2? Numerical answer How much is produced by firm 1, 2, and 3?

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Three firms share a market. The demand function is
P(q1, 92, 93) = 10 – q1 – 92 – 93, where q; is the
output of firm i, Player i. The marginal cost per unit for
each firm is zero.
Suppose firm 1 is a market leader, and that firm 2, and
firm 3 choose q2 and q3 simultaneously after observing q1
Find the SPE of this game. How much is produced by firm
2?
Numerical answer
How much is produced by firm 1, 2,
and 3?
Transcribed Image Text:Three firms share a market. The demand function is P(q1, 92, 93) = 10 – q1 – 92 – 93, where q; is the output of firm i, Player i. The marginal cost per unit for each firm is zero. Suppose firm 1 is a market leader, and that firm 2, and firm 3 choose q2 and q3 simultaneously after observing q1 Find the SPE of this game. How much is produced by firm 2? Numerical answer How much is produced by firm 1, 2, and 3?
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