Consider an infinitely repeated Bertrand oligopoly game with discount factor æ>1. The unite cost of production is a constant c = 0.2 and the same for all n>2 firms. There are no fixed costs.Desribe a form of "trigger" strategies that can facilitate tacit collusion in pricing. Determine the condition under which such strategies can sustain the monopoly price in each of the following cases: 1. The market demand in each period is D(p)=1-p.(Caculate the monopoly price and profit explicitly in answer.) 2. At the end of each period, the market ceases to exist with probability gama.
Consider an infinitely repeated Bertrand oligopoly game with discount factor æ>1. The unite cost of production is a constant c = 0.2 and the same for all n>2 firms. There are no fixed costs.Desribe a form of "trigger" strategies that can facilitate tacit collusion in pricing. Determine the condition under which such strategies can sustain the monopoly price in each of the following cases: 1. The market demand in each period is D(p)=1-p.(Caculate the monopoly price and profit explicitly in answer.) 2. At the end of each period, the market ceases to exist with probability gama.
Chapter15: Imperfect Competition
Section: Chapter Questions
Problem 15.1P
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Consider an infinitely repeated Bertrand oligopoly game with discount factor æ>1. The unite cost of production is a constant c = 0.2 and the same for all n>2 firms. There are no fixed costs.Desribe a form of "trigger" strategies that can facilitate tacit collusion in pricing. Determine the condition under which such strategies can sustain the
1. The market demand in each period is D(p)=1-p.(Caculate the monopoly price and profit explicitly in answer.)
2. At the end of each period, the market ceases to exist with probability gama.
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