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Author Question: Two firms engage in Bertrand competition in differentiated products. After doing all the appropriate ... (Read 37 times)

cmoore54

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on: Jul 1, 2018
Two firms engage in Bertrand competition in differentiated products. After doing all the appropriate calculations, you find the best-response functions are PB = 2.5 + .15PC and PC = 1.5 + .075PB. Without doing any further calculations, can you determine the relationship between their Nash equilibrium prices?
 a. Yes, PB > PC
  b. Yes, PC > PB
  c. Yes, PB = PC
  d. No; it cannot be determined.

Question 2

Consider the market for nonalcoholic beers from the previous question. Cudweisers' price in a Nash equilibrium (assuming Bertrand competition in these differentiated beers) is about
 a. 0.99
  b. 1.09
  c. 1.71
  d. 2.55


scikid

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Reply #1 on: Jul 1, 2018
Answer to Question 1

a

Answer to Question 2

b


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