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Suppose that there are 100 symmetric firms each with a constant marginal cost 3 and a fixed cost 4. They first decide (simultaneously) whether to enter or not enter a market. A firm that does not enter get payoff 0. A firm i that enters the market sees the other firms that have entered, play a Cournot (quantity competition) game with the others given a demand Q = 45−P, and earns a profit of P ·qi −3qi −4. Find two subgame perfect equilibria in pure strategy. What are the firms’ profits in these equilibria?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91570602

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