Business, 01.04.2020 19:30 mckenziealexander

Fire Wings (F) and WingStop (W), the two places offering chicken-wings in Davis sell differentiated end-products, due to the different mix of spices they use. Further, Wingstop gets a higher demand as it is located closer to the Davis downtown. i) Quantity competition: Suppose they face inverse demands of pe = 112 - qw – 0.5qw and pw = 130 – qw – 0.52F respectively, where qr and qw are the number of buckets of wings produced by them everyday. (Do you see how Wingstop gets a higher demand?) Each firm has a marginal cost of m= 5 per unit. Solve for the Nash-Cournot equilibrium quantities. ii) Price Competition: For the same marginal cost as before, suppose Firm 1 faces a demand function of qr = 112 – 2pF + pw, and Firm 2 faces qw = 130 - 2pw +Pr. Solve for the Bertrand equilibrium.

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Fire Wings (F) and WingStop (W), the two places offering chicken-wings in Davis sell differentiated...

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