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Consider the case of exogenous differentiation in a Bertrand Model. There are two firms (1 and 2) with marginal cost equal to zero, and the following demands: Q1 = 1 – p1 + c p2, and Q2 = 1 + c p1 – p2, where c is a positive constant.

-Write the equation of the profit function for every firm.

-Find the equation of the best response function of every firm

-Find the Bertrand-Nash equilibrium.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91856963

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