question archive What is the main punishment differences in Cournot and Bertrand Models? A
What is the main punishment differences in Cournot and Bertrand Models? A
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What is the main punishment differences in Cournot and Bertrand Models?
A. In Cournot, after the agreement is broken, firms produce the quantity they agreed upon in their initial grim strategy.
B. In Bertrand, after the agreement is broken, firms set price to zero and both firms accrue zero profits.
C. In Cournot, after the agreement is broken, firms leave the market and supply goes to zero drastically.
D. In Bertrand, after the agreement is broken, firms will charge their marginal Cost and this is bad for both firms.
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D. In Bertrand, after the agreement is broken, firms will charge their marginal Cost and this is bad for both firms
In the Bertrand model, the firms intend to earn the optimal levels of profits by setting prices greater than the marginal costs of production. This scenario enables the firms to earn the optimal range of profits. But whenever this arrangement typically breaks, then the firms begin to attain the prices settled equivalent to the marginal costs.
