Consider an industry in which FOUR firms compete in prices with an infinite horizon and a discount factor δ. All firms have a constant marginal cost of c. Initially, total demand in the industry is D(p) but demand is growing every period by a growth rate of g>0. This means demand in the next period is (1+g)D(p), demand in the following period is (1+g)2 D(p) and so on. Consider a subgame perfect equilibrium of the infinitely repeated price game in which firms charge the monopoly price and use trigger strategies with indefinite reversion to the static Nash equilibrium. Assume the growth rate is g=1/4. What is the lowest value of the discount factor for which collusion can be sustained? [Give a number between 0 and 1 with a maximum of two decimals.]

Three firms produce identical products and compete in a market where the inverse demand function is P(q1, q2, q3) = 87 − q1− q2− q3. Each has a per-unit cost of 6 and zero fixed cost. They simultaneously choose quantities. In scenario (a), find the Nash equilibrium of this game and let A = firm 2's profit in the Nash equilibrium. In scenario (b), assume that the firms form a cartel, i.e., they act as a monopoly and split the profit evenly. If the total quantity produced by the cartel is Q, then the inverse demand is P(Q) = 87 - Q. Let B = firm 2's profit in the cartel. Calculate the value of A - B and enter your answer in the box below. Please round your answer to 3 decimal places (e.g., write 4/3 as 1.333).

The model of Milgrom and Roberts describes an infinitely repeated games.Select one:TrueFalse

Suppose the following normal form game is played twice. Players observe the actions chosen in the first period prior to the second period. Each player's total payoff is the sum of his/her payoff in the two periods.Consider the following strategy: Play A in period 1, play C in period 2 if the action profile in period 1 is (A;A), otherwise play B. What is the highest value of x>0 for which playing the stated strategy by both players is a subgame perfect equilibrium of the twice repeated game?  A B CA 1,  7 0,  4 0,  0B 4,   0 x   x 0,  0C 0,  0 0,  0 7, 1[Write your answer as a decimal number like 0.33]

Consider a perfectly competitive market with identical firms and a downward-sloping market demand curve. Assume that the market is initially in a long-run (and short-run) equilibrium. Suppose the variable costs of production increase, which shifts up the marginal cost and average total cost curves to the same extent. In the long run, we would expect the price to _________ and the number of firms in the market to ___________.Group of answer choicesincrease; decreaseincrease; increasedecrease; decreasedecrease; increaseNone of the above

Consider the following two statements: A strictly dominated strategy of the stage game can never be played in a subgame perfect Nash equilibrium of an infinitely repeated game with discounting. An infinitely repeated game always has a subgame perfect Nash equilibrium. Which of the following is correct? a. Only statement 1 is true. b. Only statement 2 is true. c. Both statements are true. d. Neither statement is true.