Question

In: Economics

) Consider a Bertrand duopoly where ?? , ?? and ??(?? ) = ??? are quantity,...

) Consider a Bertrand duopoly where ?? , ?? and ??(?? ) = ??? are quantity, price and total cost, respectively, for firm ? ∈ {1,2} where ? > 0. Assume neither firm has a capacity constraint.

a. Derive the equilibrium quantities and prices if the products are undifferentiated.

b. Derive the equilibrium quantities and prices if the products are differentiated such that residual inverse demand for firm ? is ?? = ?? − ???? + ???? given the price charged by firm ? ≠ ? where ?? , ?? and ?? are positive constants.

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Expert Solution

Rahul Sunny answered 8 months ago
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