oligopoly 1

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1 For each of the following normal-form games, identify any dominant and any dominated strategies. Attempt to solve the normal-form game using successive elimination of dominated strategies and describe or illustrate your process. Attempt to solve the normal-form game finding the Nash Equilibrium using best-responses and describe or illustrate your process. Describe the Nash Equilibrium actions and payoffs.

2 There are 2 firms in an identical-product Cournot duopoly. Demand for their product is characterized by the demand curve: 𝑝=40−𝑞𝐴−𝑞𝐵, The cost for firm A is: 𝐶(𝑞𝐴)=30+10𝑞𝐴 and the cost for firm B is: 𝐶(𝑞𝐵)=30+10𝑞𝐵

3 Now lets focus on the market for modern large, long-distance jets. Boeing entered this market first with its 787 Dreamliner. Suppose that gave Boeing the opportunity to commit to its production to which Airbus had to respond. There are three possible outputs for each firm in this market and the payoffs for each combination of outputs produced by each company are as follows:

4 Now, lets consider a longer time frame in the modern large, long-distance jet market. Suppose that instead of acting sequentially, Boeing and Airbus interact simultaneously, but repeatedly. The payoff table is the same as in Section 3.

 

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