Two Firms Produce Identical Products at Zero Cost, and They

question 78

Essay

Two firms produce identical products at zero cost, and they compete by setting prices. If each firm charges a low price, then both firms earn profits of zero. If each firm charges a high price, then each firm earns profits of $30. If one firm charges a high price and the other firm charges a low price, the firm that charges the lower price earns profits of $50 and the firm charging the higher price earns profits of zero.
a. Which oligopoly model best describes this situation?
b. Write this game in normal form.
c. Suppose the game is infinitely repeated. Can the players sustain the "collusive outcome" as a Nash equilibrium if the interest rate is 50 percent? Explain.

Comprehend how cloud computing supports resource sharing and on-demand services.

Understand how grid and utility computing contribute to the evolution of cloud computing.

Recognize the importance of scalability and virtualization in cloud computing.

Learn about the transition from traditional computing infrastructures to enterprise computing.

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Definitions:

Freedom

The power to act without being coerced or restrained. The idea of metaphysical freedom holds that a human decision or action is a person’s own responsibility and that praise and blame may be appropriately ascribed. The most extreme interpretation of freedom is the absence of any causes or determinations. Thus, an indeterminist would say that an event was free if it had no causes; some philosophers would say that a human act was free if it was only self-caused but not determined by anything else (including a person’s character). Certain determinists, however (soft determinists), would say that an act is free only if it is “in character” and based on a person’s desires and personality. Most generally, we say that a person’s act was free, whether or not it was the result of a conscious decision and whether or not certain causes may have been involved, if we would say that he or she could have done otherwise.

Indeterminists

Those who believe that not all events, including moral choices, are determined by previously existing causes.

Subatomic Particle

A particle smaller than an atom, including protons, neutrons, and electrons, which are the building blocks of atoms.

Yoruba Philosophy

A system of thought native to the Yoruba people of West Africa, characterized by its rich oral tradition, emphasis on community, and concepts of destiny, the spiritual world, and ethical living.