Please with a full explanation. Let's consider an k-firm repeated game over an infinite discrete-timehorizon t = 0, 1, .. with discount factor os 1. The goods that firmsproduce are perfect substitutes. Firms are in Bertrand competition.Each firm has constant marginal cost m. The demand at time t isq(t)=6'D(pt), where B is an expectation of future expansion orcontraction and B8 < 1.B and k are fixed , for what values of 8 is full collusion at the(i)monopoly price a sustainable equilibrium of the repeated game?(ii)How does the ease of sustaining collusion change as the rateof expansion or contraction of the industry changes?

A monopoly refers to a market structure in which a single corporation or entity is the sole supplier…

Let's consider an k-firm repeated game over an infinite discrete-time horizon t = 0, 1, ... with discount factor o≤ 1. The goods that firms produce are perfect substitutes. Firms are in Bertrand competition. Each firm has constant marginal cost m. The demand at time t is q(t)= D(pt), where ẞ is an expectation of future expansion or contraction and ẞ8 < 1. (i) ẞ and k are fixed, for what values of 8 is full collusion at the monopoly price a sustainable equilibrium of the repeated game? (ii) How does the ease of sustaining collusion change as the rate of expansion or contraction of the industry changes?

Let's consider an k-firm repeated game over an infinite discrete-time horizon t = 0, 1, ... with discount factor o≤ 1. The goods that firms produce are perfect substitutes. Firms are in Bertrand competition. Each firm has constant marginal cost m. The demand at time t is q(t)= D(pt), where ẞ is an expectation of future expansion or contraction and ẞ8 < 1. (i) ẞ and k are fixed, for what values of 8 is full collusion at the monopoly price a sustainable equilibrium of the repeated game? (ii) How does the ease of sustaining collusion change as the rate of expansion or contraction of the industry changes?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.8P

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