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Problem 1. Consider a Cournot game with n > 2 firms, where all firms are identical....

Problem 1.

Consider a Cournot game with n > 2 firms, where all firms are identical. Assume the linear demand and cost functions. Solve for the symmetric Nash equilibrium. Find the price at which output is sold in the Nash equilibrium and show that the equilibrium price approaches the unit cost of production, as the number of firms increases arbitrarily. Comment on your result.

Payoff function for firm 1: ?(q1, q2,...,qn) = {? - (q1 + q2 + q3 +... + qn)}q1 - cq1

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Rahul Sunny answered 2 years ago
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