Re: ISI 2015 PEB Sample Question 4

Posted by onionknight on Apr 05, 2015; 12:15pm
URL: http://discussion-forum.276.s1.nabble.com/ISI-2015-PEB-Sample-Question-4-tp7596063p7596065.html

a.) I think your answer for this part is correct.

b.)I think you've misinterpreted this part. When you look at the best response function of the two firms, there is a chance that the equilibrium itself might have one firm producing zero and the other producing a non zero quantity. You need to state the condition for which such a situation can be avoided altogether. I've explained it in the picture on this link: http://s13.postimg.org/nw3r9z3br/20150405_173747_1.jpg