Results 1 to 2 of 2

Math Help - Business math question

  1. #1
    Member
    Joined
    Jul 2008
    Posts
    212

    Business math question

    Firm A supplies parts for Firm 2's products. They value being located close to each other. But Firm A also likes to be located towards the west (a lower number) and Firm B likes to locate towards the east (a higher number). With x1 being the location of Firm A and x2 being the location of Firm B. Assume that decisions are made simultaneously. The payoffs to the two firms are:

    π1 (x1, x2) = 12 - x1^2 - (x2-x1)^2
    π2 (x1, x2) = 12 - (1 - x2)^2 - (x2-x1)^2

    Derive best response functions for the two firms and find the nash equilibrium.

    THANK YOU
    Last edited by brumby_3; May 20th 2010 at 07:09 PM.
    Follow Math Help Forum on Facebook and Google+

  2. #2
    Member
    Joined
    Jul 2008
    Posts
    212
    Can someone check these answers: so for firm 1 i got -2(x2-x1) and setting it to 0 is x1 = -x2
    and firm 2 i got 2(x2-x1) and setting to 0 i got x1=x2

    Is this correct?

    And I also want to draw a diagram of this so how would i go about doing that?

    And also is the nash equilibrium just where x1 = x2 ie where they are located at the same place?
    Follow Math Help Forum on Facebook and Google+

Similar Math Help Forum Discussions

  1. Replies: 2
    Last Post: February 15th 2010, 04:09 PM
  2. Business math
    Posted in the Business Math Forum
    Replies: 0
    Last Post: May 5th 2009, 07:40 PM
  3. Business Math
    Posted in the Algebra Forum
    Replies: 1
    Last Post: February 4th 2009, 03:04 PM
  4. Business Math
    Posted in the Business Math Forum
    Replies: 1
    Last Post: April 13th 2008, 05:10 PM
  5. Business math
    Posted in the Business Math Forum
    Replies: 0
    Last Post: August 12th 2007, 10:15 AM

Search Tags


/mathhelpforum @mathhelpforum