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Anna Blajer-Gołębiewska M. Sc.

Exerci.se 5. There is a duopoly in the market. Companies agree to form a cartel. They established common price policy. As a result the price for one unit of output is said to be 10 m.u.

a) Determine the profits of each company in the cartel.

b) Is the cartel stable?

c) Find the dominant strategies.

d) Find the Nash eąuilibrium.

Microeconomics

	Company I
Price =10			Price = 12

Price = 10

Company II

Price = 12

22 22	20 23
20 21	18 22

Exercise 6. There are two companies in the market of orange juice. They can establish price for one bottle of orange juice at the level of PLN 1, PLN 1,5 or PLN 2.

a) Are there any dominant strategies for each players in this gamę? If so , find them.

b) Is there any Nash eąuilibrium in this gamę?

c) Is there any Pareto eąuilibrium in this gamę?

d) What profit would they gain if they signed an agreement (formed a cartel)?

Company 1

Company II

0	0	50	-10	40	-20
10	50	20	20	90	10
0	0	10	90	50	50

PLN 1

PLN 2

PLN 3

Exerci.se 7. Consider the following 2-player gamę: there are two companies in the market of food for cats. Each of the companies is taking into consideration attracting customers by gifts added to each package. They can choose from among a book about cats, a toy for cats or 20% of food free. The profits related to each solution are presented in the matrix.

a) Find the dominant strategies.

b) Is there any Nash eąuilibrium in this gamę?

c) Is there any Pareto eąuilibrium in this gamę?

Player I

book

toy

20% free

Player II

10 10	7 14	9 11
13 8	14 14	12 10
16 12	15 16	13 13