X hits on this document

PDF document

Cournot’s model of oligopoly - page 3 / 38

138 views

0 shares

0 downloads

0 comments

3 / 38

Nash equilibrium

Payoff functions

Firm 1’s profit is

π1(q1, q2) = q1(P (q1 + q2) c)

=

cq1 q1(α c q 2

q1)

if q1 α q2 if q1 > α q2

Best response functions

Firm 1’s profit as a function of q1:

profit of firm 1

q 2 = 0

q 2 > 0

0

a - ca a - c- q 2

q

1

Up to α q2 this function is a quadratic that is zero when q1 = 0 and when q1 = α c q2.

3

Document info
Document views138
Page views138
Page last viewedSat Jan 21 16:08:17 UTC 2017
Pages38
Paragraphs543
Words4259

Comments