Re: DSE 2013 Doubts

Posted by kangkan on May 30, 2014; 2:59pm
URL: http://discussion-forum.276.s1.nabble.com/DSE-2013-Doubts-tp7590991p7591103.html

7 and 8....

Part 1.
q1=a-p1-bp2     q2=a-pe-bp1

Now eliminate p2 and express p1 interms of q1 and q2

p1= a/(1-b)  -q1/1-b^2   bq2/1-B^2

Now since the two firms price independently,it is a a case of cournot equilibrium...let q2=q2* (expected) and solve for the cournot equilibrium....after goin thru a lot of algebric simplification ,we wud get p1=p2= a+c -B^2/( [(2+b)(1-b)]..now since b is quite small,ignore the sqaures of b p1 simplifies to a+c/@-b

parrt 2..if the same...just solve the maximization problem with q1 and q2 as the control variables.

I wud have loved to put a pic,but my phone has no camera

I see that the other problems have already been solved