0
   

Stackleburg Oligopoly 3 firms

 
 
Reply Wed 22 May, 2019 05:33 pm
magine that there are 3 firms in a monopolistic market, F1, F2 and F3. Firms 1 and 2 are incumbent firms and act simultaneously whereas Firm 3 observes the actions of both firms before deciding whether to enter.

All firms face a market price of 𝑃(𝑄)=16βˆ’π‘ž1βˆ’π‘ž2βˆ’π‘ž3. Incumbent firms face a production cost of 𝐢𝑖(π‘žπ‘–)=4π‘žπ‘– for 𝑖=1,2. Firm 3 faces a production cost of 𝐢3(π‘ž3)=4+4π‘ž3. Find both firm 3 and firm 1's payoff.

I understand that I need to take firm 3's best response function which is
0.5(12βˆ’π‘ž2βˆ’π‘ž3)
but I am not sure where to go from there. How would I go about finding each firms predicted quantity? Thanks!
  • Topic Stats
  • Top Replies
  • Link to this Topic
Type: Question • Score: 0 • Views: 555 • Replies: 0
No top replies

 
 

Related Topics

 
  1. Forums
  2. » Stackleburg Oligopoly 3 firms
Copyright © 2024 MadLab, LLC :: Terms of Service :: Privacy Policy :: Page generated in 0.17 seconds on 12/03/2024 at 02:46:08