2. Consider the following Cournot game in which three firms simultaneously choose a non-negative output quantity. Let qı

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2 Consider The Following Cournot Game In Which Three Firms Simultaneously Choose A Non Negative Output Quantity Let Qi 1 (35.51 KiB) Viewed 25 times

2. Consider the following Cournot game in which three firms simultaneously choose a non-negative output quantity. Let qı denote the quantity chosen by firm 1, 22 denote the quantity chosen by firm 2, q3 denote the quantity chosen by firm 3, and Q denote the total quantity, 91 +92 +93. The market price is given by p = 600 - 20. Each firm has a marginal production cost of 40 per unit of output. That is, if firm 1 chooses qı, it's payoff is (600 - 2Q)91-4091. (a) (10 points) Solve for the pure strategy Nash equilibrium of this game. [Hint 1: Think about what would be the firm i's best response function, BR(qj,91), given the other firms' quantities, (q;,91).] (Hint 2: Don't worry about the convexity of the objective functions. In other words, don't worry about the second order condition.)