Consider the following game. In the first stage, firm 1 decides how much to advertise a(alpha). In t

Consider the following game. In the first stage, firm 1 decides how much to advertise a(alpha). In the second stage, firm 1 decides how much to produce given their advertising choice. In the third stage, firm 2 observes firm 1Ac€?cs production and advertisement decisions and then decides how much to produce.

Market inverse demand: P(Q)= a(alpha) – q

Firm 1Ac€?cs cost function: c1(q1,a(alpha))=a(alpha)^3/192

Firm 2Ac€?cs cost function: c2(q2)=0

i. Does this game have perfect or imperfect information? Explain. ii. Find all SPNE of this game and what are the profits to each firm for each SPNE you found.

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