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Math Help - Game Theory, Dixit

  1. #1
    Junior Member
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    Sep 2010
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    Game Theory, Dixit

    I'm using the Dixit model...

    The inverse market demand function is:

    p=100- \frac{q}{2}

    w=10 \,

    r=30

    To start I have to find firm 2's (the entrant) best response function after it has decided to enter.

    I have:

    q_2=\frac{100-\frac{q_1}{2}-(w+r)}{2}

    =\frac{200-80-q_1}{4}

    =\frac{120-q_1}{4}

    Look good?
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  2. #2
    Junior Member
    Joined
    Sep 2010
    Posts
    63
    Or is it:

    q_2=\frac{100-w-r}{2*(1/2)}-\frac{q_1}{2}

    =60-\frac{q_1}{2}
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