Re: DSE 2013 Doubts

Posted by kangkan on Jun 01, 2014; 7:34pm
URL: http://discussion-forum.276.s1.nabble.com/DSE-2013-Doubts-tp7590991p7591309.html

Hi...let P(e) denote the expected prices

q1= a-p1+p2(e)*b
=> p1=a-q1+P2(e)*b

the profit maxi prob is

Max q1( a-q1- p2(e)*b)) - q1*c

Solving we get q1= a+bP2(e)-c/2 and a similar one for q2

Now remeber this equation must satisfy the demand equations in equlb

So a-c+bp2(e)/2= a-p1+bP2(e)

by the symmetry of the problem we can say that p1=p2 =P*(say)

Subsituting in the previous equation we get p*=a+c/2-b  :)