Consider a price-setting oligopoly with 4 identical firms, all with constant marginal cost c. The firms...

Consider a price-setting oligopoly with 4 identical firms, all with constant marginal cost c. The firms compete for an infinite number of periods and have the same discount factor. Derive the minimum discount factor such that there exists a collusive equlibirum with monopoly pricing.

Expert Solution

Rahul Sunny answered 2 years ago

(a) [15 marks] Consider two identical firms with no fixed costs and constant marginal cost c...

(a) [15 marks] Consider two identical firms with no fixed costs and constant marginal cost c which compete in quantities in each of an infinite number of periods. The quantities chosen are observed by both firms before the next round of play begins. The inverse demand is given by p = 1 − q1 − q2, where q1 is the quantity produced by firm 1 and q2 is the quantity produced by firm 2. The firms use ‘trigger strategies’ and...

The Toy business has 4 firms. All firms have an identical marginal cost of MC =...

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The gadget industry has four firms. All the firms have constant marginal cost, MC = 9...

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Compare price taker firms with price searcher firms in terms of marginal cost and marginal revenue....

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Consider an industry in which all firms have constant marginal costs of 50, MC = 50,...

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The table shows the cost data for one of several identical firms in a constant cost...

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Firms maximize profit by setting marginal revenue (MR) equal to marginal cost (MC). Assuming that the...

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A Cournot oligopoly consists of four firms, each with a marginal cost of production of MC=10....

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