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Differentiated product Bertrand. Suppose that firm Y produces yellow marbles and that firm W produces white marbles Further suppose

Differentiated product Bertrand. Suppose that firm Y produces yellow marbles and that firm W produces white marbles. Further suppose that consumers' tastes are heterogeneous-some prefer yellow marbles while others prefer white ones. Firm-specific demands are given by: The subscripts y and w refer to yellow and white marbles, respectively (a) Suppose both firms have a marginal cost of $15/bag. What are the price and quantity sold (b) Now suppose that firm W has a marginal cost of only $10. What are the new prices and (c) If you are the owner of a firm that is at a comparative cost disadvantage and compete in a by both firms in the differentiated Nash-Bertrand equilibrium? quantities sold by both firms? Bertrand game, would you rather be in an industry with differentiated products or an industry with homogenous products? Why?

May 15 2020 View more View Less

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