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2. Firm 1 and Firm 2 compete in a Bertrand duopoly and set prices p; and p2, respectively. The firms have constant margi
Posted: Thu May 26, 2022 7:22 am
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- 2 Firm 1 And Firm 2 Compete In A Bertrand Duopoly And Set Prices P And P2 Respectively The Firms Have Constant Margi 1 (25.81 KiB) Viewed 23 times
2. Firm 1 and Firm 2 compete in a Bertrand duopoly and set prices p; and p2, respectively. The firms have constant marginal cost c and zero fixed costs. (a) Show the Nash equilibrium of the game and interpret it. [5 marks] (b) What happens if Firm 2 lowers its marginal cost to where c'<c while Firm 1's marginal cost remains c? [5 marks]