Stackelberg

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lena.b
Posts: 1
Joined: Tue Dec 08, 2015 7:52 pm

Stackelberg

Post by lena.b » Tue Dec 08, 2015 7:53 pm

Hello, i am having a problem with a Stackelberg problem:
Two companies are selling their fish in a market with inverse demand: P(Q)=100-Q
Company one arrives at 8h and company 2 at 10h. No other competitor. They both have a marginal cost of 10. Company two also has a one time fixed cost of F. We know if company 1 sells less then 70 units company 2 can be profitable. Should company one let company two enter? And what are the nash equilibrium in subgames?
I usually know how to do a Stackelberg, but with this kind of undefined fixed cost im lost. Thank you for your help!

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