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Two firms simultaneously produce quantities of a good, which costs them $5 per unit to produce. They can produce any quantity between 0 units and 500 units. (To keep the game finite, assume they must select an integer number of units.) The units produced are then totalled, and a price for them is set that will clear markets where demand for the good is given by P = $1000 - 2Q, where Q is the total quantity supplied. Each firm gets revenue according to the equilibrium price and the amount that it sells. What does an extensive form of this game look like? What does the strategic form of this game look like? How would things change if one firm, say firm A, got to see how much firm B produced before launching production itself?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M92009383

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