Task 1.

(T and B, 10 points) Describe briefly how you

tackled the problem of finding your monopoly’s
demand curve and how you tried to find the most
profitable price. Was this the best way? If not,
why not?

Period Quantity Price Profit

1 0 200 0
2 0 199 0
3 10.38764 100 831.0116
4 23.82698 80 1429.619
5 50.70564 40 1014.113
6 37.26631 60 1490.652
7 40.62614 55 1421.915
8 38.61024 58 1467.189
9 35.25041 63 1515.767
10 34.24246 64.5 1523.789

At the beginning I had difficulties understanding the game. I tried a random

number at the beginning and got a Profit of 0. Then I've looked at my
neighbour's screen and got again 0 profit (I thought the values change each
round). Next I randomly guessed numbers and thought by intuition that it
must lay around 60

This was not the best way, I should have used my economical understanding
to calculate the optimal price after the second round.

1600
1400
Task 2. (T, 5 points) Look up your market parameters ... and calculate the
optimal monopoly price. Or 1200
alternatively derive it graphically? Compare it to the one given in the table. 1000
Profit

800
600
400
Graphically it is hard to determine the optimal price, it would only be
"approximately around 60". Calculation is in this sense more effective. 200
0
20 40 60
 SessionID Treatmentsession Subject FinalProfit ShowUpFeShowUpFee
170622_0817 5 session 8 19706.64 0 0

Subject 8
UpperLimitMaxPrice 200
CostPerUnit 20
Slope -1.488169
MaxPrice 115.4586
MaxQuantity 77.5843
OptimalPrice 67.72929
OptimalQuantity 32.07248
OptimalProfit 1530.797
OptimalTotalProfit 15307.97

Demand Function : Q = a - bP
a (Max Quantity) 77.5843
b (Slope/ elastisity) -1.488169
P (Price) (Optimal) 67.72929
P (Price) (Max) 115.4586

Monopoly Profit
1600
1400
1200
1000
Profit

800
600
400
200 60
0
20 40 60 80 100 120 140 160 180 200 220 50

Price 40
Quantity

30

20

10

0
20 40 60 80
 40

Quantity
30

20

10

0
20 40 60 80
 MoneyAdded MoneyTMoneyEarnID Percentag PerformanPerformanPerforman
0 19707 19706.64 6122268 69.85941 4.880337 4.285714 7.857143

You need just 2 guesses

Quantity Price
10.38764 100
23.82698 80

1. Calculate the slope (𝑌2−𝑌1)/(𝑋2−𝑋1)

-1.488169

2. Calculate the intercept F(x) = m*x+b

100= 10.39* (-1.49)+b
115.4586 =b

P=115.46-1.49Q MC = 20

Profit = 115.46- 1.49Q)*Q - 20Q

First derivative 115.46 -2.98Q -20=0 (You should check 2nd order derivativ
95.45857 = 2.98 Q Second derivative
= --> Optimal quantity 32.07248 = 1Q

P=115.46-1.49Q
= --> Optimal Price 67.72929

Monopoly
60 1600
1400
50
1200
40
1000
Quantity

Profit

30 800
600
20
400
10
200
0 0
20 40 60 80 100 120 140 160 180 200 220
 1200
40
1000
Quantity

Profit
30 800
600
20
400
10
200
0 0
20 40 60 80 100 120 140 160 180 200 220
Price
 PerformanceCournot
6.315789

ld check 2nd order derivative for maximum)

-2.98 --> Max
Subject 8 Max Price 120
Group 3 Slope -1
MaxQuantity 120 Marginal Costs 20
GroupSize 2 Optimal Price 50
Optimal Quantity 70
P= 120 - Q Theoretically Marginal Costs = Price
Q= 120 - P
The theory predicts that the price would be 20 (P=MC), resulting
in a total quantity of Q= 120 - 20*1 = 100
q (quantity for individual Firms) = 100/n

4. (T, 5 points) What would be the best strategy of the firms if they cooperate and jointly
maximize profits (for all possible sizes: 2, 3, 4, 5, and 6 firms)?

The best strategy for each group size would be to set prices together and act as a monopoly. In this case the Supply functio
would be the Demand function /# of group members. For example a group with 4 participants would act as a monopoly with
function P=120-Q and the supplied quantity would be /4 so the optimal price is 50 and optimal supplied quantity is 70. With
participants we each member would supply 17.5 (70/4) units.

5. (T, 5 points) Theoretically communication does not help to improve the firms’ profit? Why not?

Because there are still incencitives to cheat and raise the price below 70 and receive all the profit. There are no
possibilities to punish "cheaters" so there are major incentives to cheat, while there are minor incentives to stick
to monopoly prices. Additionally if once one player lowered the prices, all trust is gone. This will leads us to the
situation where marginal costs = marginal revenue = Price

6. (B, 10 points) Look at the data for the Bertrand oligopoly without communication. Draw a graph (with Excel)
with the development of the minimum price over all rounds for the different market sizes (2, 3, 4, 5, and 6). More
precisely: Take all duopolies, for each round average over the minimum price and see how it develops over the
rounds. Do the same with the market sizes of 3, 4, 5, and 6. Note: not all market sizes exist. In this case just leave
them out.

Period Group GroupSize MinimumPrice

1 1 2 21
2 1 2 29.99
3 1 2 20.05
4 1 2 24.99
5 1 2 20.99
6 1 2 20.97
7 1 2 20.9

1 3 2 20.5
2 3 2 20.25
3 3 2 20.5
4 3 2 21
5 3 2 21.5
6 3 2 20.1
7 3 2 20.05

1 5 2 22
2 5 2 22.5
3 5 2 20.5
4 5 2 20.02
5 5 2 20.03
6 5 2 20.01
7 5 2 20.01

1 7 2 25
2 7 2 26
3 7 2 25.5
4 7 2 23
5 7 2 22.5
6 7 2 21.95
7 7 2 21

1 2 5 25
2 2 5 23
3 2 5 20.99
4 2 5 20.05
5 2 5 20.01
6 2 5 20.01
7 2 5 20.01
1 4 5 20.99
2 4 5 20.01
3 4 5 20
4 4 5 20
5 4 5 20
6 4 5 20.01
7 4 5 20.01
1 6 5 25
2 6 5 22
3 6 5 20.45
4 6 5 20.01
5 6 5 20.01
6 6 5 20.01
7 6 5 20.01
1 8 5 25
2 8 5 21
3 8 5 20.01
4 8 5 20.01
5 8 5 20.01
6 8 5 20.01
7 8 5 20
 Profit = (120-1Q)*Q -20Q
3. (T, 5 points) Determine the theoretical outcomes of the market (
1st derivative 100-2Q =0 possible sizes: 2, 3, 4, 5, and 6 firms).
Q = 50
P= 120-50*(-1) = 70

Period Profit TotalProfit Participate MaxPrice

1 49.75 49.75 0 120
2 24.9375 74.6875 0 120
3 49.75 124.4375 0 120
4 99 223.4375 0 120
5 147.75 371.1875 0 120
6 0 371.1875 0 120
7 4.9975 376.185 1 120

nopoly. In this case the Supply function

cipants would act as a monopoly with the
d optimal supplied quantity is 70. With 4
4) units.

ofit? Why not?

the profit. There are no

minor incentives to stick
This will leads us to the

raw a graph (with Excel)

zes (2, 3, 4, 5, and 6). More
ow it develops over the
xist. In this case just leave

Group Size 2
31
29
27
Minimum Price

25
23
21
19
17
 31
29
27

Minimum Price
25
23
21
19
17
15
1 2 3 4 5 6 7
Period

Group 1 Group 3 Group 5 Group 7

Group Size 5
27

25
Minimum Price

23

21

19

17

15
1 2 3 4 5 6 7
Period

Group 2 Group 4 Group 6 Group 8

heoretical outcomes of the market (for all
firms).

Price MinimumPriceNumOfSellers TotalQuantity Quantity

20.5 20.5 1 99.5 99.5
20.25 20.25 1 99.75 99.75
20.5 20.5 1 99.5 99.5
21 21 1 99 99
21.5 21.5 1 98.5 98.5
22 20.1 1 99.9 0
20.05 20.05 1 99.95 99.95
 6 7

up 7

6 7

oup 8
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Group Profit TotalProfit Participate MaxPrice Slope CostPerUnit MaxQuantity
1 0 0 0 120 -1 20 120
1 224.71 224.71 0 120 -1 20 120
2 0 0 0 120 -1 20 120
2 0 0 0 120 -1 20 120
2 0 0 0 120 -1 20 120
2 99 99 0 120 -1 20 120
2 0 0 0 120 -1 20 120
3 49.75 49.75 0 120 -1 20 120
3 0 0 0 120 -1 20 120
4 0 0 0 120 -1 20 120
4 519.75 519.75 0 120 -1 20 120
4 0 0 0 120 -1 20 120
4 0 0 0 120 -1 20 120
4 0 0 0 120 -1 20 120
5 0 0 0 120 -1 20 120
5 475 475 0 120 -1 20 120
6 0 0 0 120 -1 20 120
6 0 0 0 120 -1 20 120
6 0 0 0 120 -1 20 120
6 0 0 0 120 -1 20 120
6 99 99 0 120 -1 20 120
7 564 564 0 120 -1 20 120
7 0 0 0 120 -1 20 120
8 0 0 0 120 -1 20 120
8 0 0 0 120 -1 20 120
8 0 0 0 120 -1 20 120
8 0 0 0 120 -1 20 120
8 0 0 0 120 -1 20 120
9 900 900 0 120 -1 20 120
9 0 0 0 120 -1 20 120
10 0 0 0 120 -1 20 120
10 291 291 0 120 -1 20 120
1 118.56 118.56 0 120 -1 20 120
1 0 224.71 0 120 -1 20 120
2 0 0 0 120 -1 20 120
2 0 0 0 120 -1 20 120
2 0 0 0 120 -1 20 120
2 0 99 0 120 -1 20 120
2 0 0 0 120 -1 20 120
3 0 49.75 0 120 -1 20 120
3 0.9999 0.9999 0 120 -1 20 120
4 0 0 0 120 -1 20 120
4 0 519.75 0 120 -1 20 120
4 0 0 0 120 -1 20 120
 4 0 0 0 120 -1 20 120
4 49.75 49.75 0 120 -1 20 120
5 0 0 0 120 -1 20 120
5 900 1375 0 120 -1 20 120
6 0 0 0 120 -1 20 120
6 0 0 0 120 -1 20 120
6 0 0 0 120 -1 20 120
6 0 0 0 120 -1 20 120
6 0 99 0 120 -1 20 120
7 267.4375 831.4375 0 120 -1 20 120
7 0 0 0 120 -1 20 120
8 0 0 0 120 -1 20 120
8 0 0 0 120 -1 20 120
8 0 0 0 120 -1 20 120
8 0 0 0 120 -1 20 120
8 0 0 0 120 -1 20 120
9 0 900 0 120 -1 20 120
9 819 819 0 120 -1 20 120
10 0 0 0 120 -1 20 120
10 147.75 438.75 0 120 -1 20 120
1 49.75 168.31 0 120 -1 20 120
1 0 224.71 0 120 -1 20 120
2 0 0 0 120 -1 20 120
2 0 0 0 120 -1 20 120
2 -1.0001 -1.0001 0 120 -1 20 120
2 0 99 0 120 -1 20 120
2 0 0 0 120 -1 20 120
3 0.49995 50.24995 0 120 -1 20 120
3 0.49995 1.49985 0 120 -1 20 120
4 0 0 0 120 -1 20 120
4 9.99 529.74 0 120 -1 20 120
4 0 0 0 120 -1 20 120
4 0 0 0 120 -1 20 120
4 0 49.75 0 120 -1 20 120
5 99 99 0 120 -1 20 120
5 0 1375 0 120 -1 20 120
6 -0.33336667 -0.33336667 0 120 -1 20 120
6 -0.33336667 -0.33336667 0 120 -1 20 120
6 -0.33336667 -0.33336667 0 120 -1 20 120
6 0 0 0 120 -1 20 120
6 0 99 0 120 -1 20 120
7 0 831.4375 0 120 -1 20 120
7 73.4524 73.4524 0 120 -1 20 120
8 0 0 0 120 -1 20 120
8 0 0 0 120 -1 20 120
 8 0 0 0 120 -1 20 120
8 0 0 0 120 -1 20 120
8 0 0 0 120 -1 20 120
9 475 1375 0 120 -1 20 120
9 0 819 0 120 -1 20 120
10 291.9399 291.9399 0 120 -1 20 120
10 0 438.75 0 120 -1 20 120
1 39.84 208.15 0 120 -1 20 120
1 0 224.71 0 120 -1 20 120
2 0 0 0 120 -1 20 120
2 0 0 0 120 -1 20 120
2 0 -1.0001 0 120 -1 20 120
2 -1.0001 97.9999 0 120 -1 20 120
2 0 0 0 120 -1 20 120
3 2.49875 52.7487 0 120 -1 20 120
3 2.49875 3.9986 0 120 -1 20 120
4 0 0 0 120 -1 20 120
4 0 529.74 0 120 -1 20 120
4 0 0 0 120 -1 20 120
4 0 0 0 120 -1 20 120
4 0 49.75 0 120 -1 20 120
5 44.7975 143.7975 0 120 -1 20 120
5 0 1375 0 120 -1 20 120
6 0 -0.33336667 0 120 -1 20 120
6 0 -0.33336667 0 120 -1 20 120
6 0 -0.33336667 0 120 -1 20 120
6 0 0 0 120 -1 20 120
6 -101 -2 0 120 -1 20 120
7 0 831.4375 0 120 -1 20 120
7 98.0199 171.4723 0 120 -1 20 120
8 0 0 0 120 -1 20 120
8 -1.0001 -1.0001 0 120 -1 20 120
8 0 0 0 120 -1 20 120
8 0 0 0 120 -1 20 120
8 0 0 0 120 -1 20 120
9 0 1375 0 120 -1 20 120
9 384 1203 0 120 -1 20 120
10 196 487.9399 0 120 -1 20 120
10 0 438.75 0 120 -1 20 120
1 0 208.15 0 120 -1 20 120
1 29.91 254.62 0 120 -1 20 120
2 0 0 0 120 -1 20 120
2 0 0 0 120 -1 20 120
2 0 -1.0001 0 120 -1 20 120
2 0 97.9999 0 120 -1 20 120
 2 0 0 0 120 -1 20 120
3 44.595 97.3437 0 120 -1 20 120
3 44.595 48.5936 0 120 -1 20 120
4 0 0 0 120 -1 20 120
4 0 529.74 0 120 -1 20 120
4 0 0 0 120 -1 20 120
4 0 0 0 120 -1 20 120
4 -204 -154.25 0 120 -1 20 120
5 0 143.7975 0 120 -1 20 120
5 9.99 1384.99 0 120 -1 20 120
6 0 -0.33336667 0 120 -1 20 120
6 0 -0.33336667 0 120 -1 20 120
6 0 -0.33336667 0 120 -1 20 120
6 0 0 0 120 -1 20 120
6 0 -2 0 120 -1 20 120
7 98.0199 929.4574 0 120 -1 20 120
7 0 171.4723 0 120 -1 20 120
8 0 0 0 120 -1 20 120
8 -1.0001 -2.0002 0 120 -1 20 120
8 0 0 0 120 -1 20 120
8 0 0 0 120 -1 20 120
8 0 0 0 120 -1 20 120
9 196 1571 0 120 -1 20 120
9 0 1203 0 120 -1 20 120
10 171.9375 659.8774 0 120 -1 20 120
10 0 438.75 0 120 -1 20 120
1 0 208.15 0 120 -1 20 120
1 4.9975 259.6175 0 120 -1 20 120
2 0 0 0 120 -1 20 120
2 0 0 0 120 -1 20 120
2 0 -1.0001 0 120 -1 20 120
2 0 97.9999 0 120 -1 20 120
2 0 0 0 120 -1 20 120
3 0 97.3437 0 120 -1 20 120
3 1600 1648.5936 0 120 -1 20 120
4 0.49995 0.49995 0 120 -1 20 120
4 0 529.74 0 120 -1 20 120
4 0 0 0 120 -1 20 120
4 0 0 0 120 -1 20 120
4 0.49995 -153.75005 0 120 -1 20 120
5 0 143.7975 0 120 -1 20 120
5 0.9999 1385.9899 0 120 -1 20 120
6 0 -0.33336667 0 120 -1 20 120
6 0 -0.33336667 0 120 -1 20 120
6 0 -0.33336667 0 120 -1 20 120
 6 0 0 0 120 -1 20 120
6 0 -2 0 120 -1 20 120
7 0 929.4574 0 120 -1 20 120
7 48.7599 220.2322 0 120 -1 20 120
8 0 0 0 120 -1 20 120
8 0 -2.0002 0 120 -1 20 120
8 0 0 0 120 -1 20 120
8 0 0 0 120 -1 20 120
8 0 0 0 120 -1 20 120
9 0 1571 0 120 -1 20 120
9 0.9999 1203.9999 0 120 -1 20 120
10 0 659.8774 0 120 -1 20 120
10 24.9375 463.6875 0 120 -1 20 120
1 0 208.15 1 120 -1 20 120
1 0 259.6175 1 120 -1 20 120
2 0 0 1 120 -1 20 120
2 0 0 1 120 -1 20 120
2 0 -1.0001 1 120 -1 20 120
2 0 97.9999 1 120 -1 20 120
2 0 0 1 120 -1 20 120
3 2100 2197.3437 1 120 -1 20 120
3 0 1648.5936 1 120 -1 20 120
4 0 0.49995 1 120 -1 20 120
4 0 529.74 1 120 -1 20 120
4 0 0 1 120 -1 20 120
4 0 0 1 120 -1 20 120
4 0 -153.75005 1 120 -1 20 120
5 0 143.7975 1 120 -1 20 120
5 0.9999 1386.9898 1 120 -1 20 120
6 0 -0.33336667 1 120 -1 20 120
6 0 -0.33336667 1 120 -1 20 120
6 0 -0.33336667 1 120 -1 20 120
6 0 0 1 120 -1 20 120
6 0 -2 1 120 -1 20 120
7 39.84 969.2974 1 120 -1 20 120
7 0 220.2322 1 120 -1 20 120
8 0 0 1 120 -1 20 120
8 0 -2.0002 1 120 -1 20 120
8 0 0 1 120 -1 20 120
8 0 0 1 120 -1 20 120
8 0 0 1 120 -1 20 120
9 0 1571 1 120 -1 20 120
9 0 1203.9999 1 120 -1 20 120
10 4.9975 664.8749 1 120 -1 20 120
10 0 463.6875 1 120 -1 20 120
GroupSize TimeContinu Price TimeOKDecisi MinimumPriceNumOfSellers TotalQuantity Quantity
2 -13 25 5 22.3 1 97.7 0
2 -6 22.3 0 22.3 1 97.7 97.7
5 -6 39.99 -10 21 1 99 0
5 -11 35 -64 21 1 99 0
5 -13 90 -24 21 1 99 0
5 -5 21 -30 21 1 99 99
5 -4 90 6 21 1 99 0
2 -2 20.5 -11 20.5 1 99.5 99.5
2 -10 140 -7 20.5 1 99.5 0
5 -11 150 -32 25.5 1 94.5 0
5 -6 25.5 -22 25.5 1 94.5 94.5
5 -3 50 -6 25.5 1 94.5 0
5 -3 50 -12 25.5 1 94.5 0
5 -38 80 -11 25.5 1 94.5 0
2 -49 30 -10 25 1 95 0
2 -34 25 3 25 1 95 95
5 -28 50 3 21 1 99 0
5 -25 35.2 1 21 1 99 0
5 -25 30 -21 21 1 99 0
5 -23 30 1 21 1 99 0
5 -88 21 -6 21 1 99 99
2 -94 26 -9 26 1 94 94
2 -90 30 -15 26 1 94 0
5 -32 75 -12 20 3 100 0
5 -31 20 -6 20 3 100 33.33333333
5 -21 50 -5 20 3 100 0
5 -17 20 -4 20 3 100 33.33333333
5 -11 20 -1 20 3 100 33.33333333
2 -22 30 1 30 1 90 90
2 -11 100 -19 30 1 90 0
2 -26 40 6 23 1 97 0
2 -20 23 -1 23 1 97 97
2- 21.2 18 21.2 1 98.8 98.8
2- 24.55 20 21.2 1 98.8 0
5- 20.01 22 20 1 100 0
5- 20 28 20 1 100 100
5- 20.01 18 20 1 100 0
5- 20.5 -15 20 1 100 0
5- 40 25 20 1 100 0
2- 20.02 18 20.01 1 99.99 0
2- 20.01 2 20.01 1 99.99 99.99
5- 30 -8 20.5 1 99.5 0
5- 25.55 22 20.5 1 99.5 0
5- 25 21 20.5 1 99.5 0
5- 30 27 20.5 1 99.5 0
5- 20.5 2 20.5 1 99.5 99.5
2- 60 24 30 1 90 0
2- 30 14 30 1 90 90
5- 20 1 20 1 100 100
5- 20.5 13 20 1 100 0
5- 20.01 2 20 1 100 0
5- 20.5 21 20 1 100 0
5- 23 -4 20 1 100 0
2- 22.75 -2 22.75 1 97.25 97.25
2- 24.99 16 22.75 1 97.25 0
5- 30 10 20 1 100 0
5- 21.45 -1 20 1 100 0
5- 21.9 7 20 1 100 0
5- 20 17 20 1 100 100
5- 45 11 20 1 100 0
2- 50 -1 29 1 91 0
2- 29 14 29 1 91 91
2- 24 23 21.5 1 98.5 0
2- 21.5 -1 21.5 1 98.5 98.5
2- 20.5 13 20.5 1 99.5 99.5
2- 21.3 14 20.5 1 99.5 0
5- 20 16 19.99 1 100.01 0
5- 21 16 19.99 1 100.01 0
5- 19.99 24 19.99 1 100.01 100.01
5- 25 2 19.99 1 100.01 0
5- 21 17 19.99 1 100.01 0
2- 20.01 23 20.01 2 99.99 49.995
2- 20.01 25 20.01 2 99.99 49.995
5- 20.51 4 20.1 1 99.9 0
5- 20.1 -2 20.1 1 99.9 99.9
5- 20.25 24 20.1 1 99.9 0
5- 26 13 20.1 1 99.9 0
5- 20.4 13 20.1 1 99.9 0
2- 21 29 21 1 99 99
2- 40 20 21 1 99 0
5- 19.99 21 19.99 3 100.01 33.33666667
5- 19.99 24 19.99 3 100.01 33.33666667
5- 19.99 25 19.99 3 100.01 33.33666667
5- 20.05 3 19.99 3 100.01 0
5- 20 25 19.99 3 100.01 0
2- 22 15 20.74 1 99.26 0
2- 20.74 -11 20.74 1 99.26 99.26
5- 20.5 19 20 1 100 0
5- 20.01 18 20 1 100 0
5- 20 5 20 1 100 100
5- 20.01 18 20 1 100 0
5- 25 0 20 1 100 0
2- 25 28 25 1 95 95
2- 31 17 25 1 95 0
2- 23.01 15 23.01 1 96.99 96.99
2- 25 11 23.01 1 96.99 0
2- 20.4 15 20.4 1 99.6 99.6
2- 21 4 20.4 1 99.6 0
5- 20.01 15 19.99 1 100.01 0
5- 20 19 19.99 1 100.01 0
5- 20 26 19.99 1 100.01 0
5- 19.99 0 19.99 1 100.01 100.01
5- 20.01 18 19.99 1 100.01 0
2- 20.05 -7 20.05 2 99.95 49.975
2- 20.05 -8 20.05 2 99.95 49.975
5- 20.1 -7 20 1 100 0
5- 20.05 17 20 1 100 0
5- 20.05 24 20 1 100 0
5- 20 18 20 1 100 100
5- 20.01 15 20 1 100 0
2- 20.45 -1 20.45 1 99.55 99.55
2- 22 22 20.45 1 99.55 0
5- 20.01 20 19 1 101 0
5- 20 20 19 1 101 0
5- 20 11 19 1 101 0
5- 20 -4 19 1 101 0
5- 19 -6 19 1 101 101
2- 22.98 -2 20.99 1 99.01 0
2- 20.99 -1 20.99 1 99.01 99.01
5- 20.1 25 19.99 1 100.01 0
5- 19.99 6 19.99 1 100.01 100.01
5- 20.2 8 19.99 1 100.01 0
5- 20.01 20 19.99 1 100.01 0
5- 20.01 -5 19.99 1 100.01 0
2- 25 5 24 1 96 0
2- 24 27 24 1 96 96
2- 22 11 22 1 98 98
2- 22.99 6 22 1 98 0
2- 20.4 22 20.3 1 99.7 0
2- 20.3 18 20.3 1 99.7 99.7
5- 20.01 24 20 3 100 0
5- 20 26 20 3 100 33.33333333
5- 20 25 20 3 100 33.33333333
5- 20 27 20 3 100 33.33333333
5- 20.01 9 20 3 100 0
2- 20.9 14 20.9 2 99.1 49.55
2- 20.9 13 20.9 2 99.1 49.55
5- 20.5 -2 18 1 102 0
5- 20.2 25 18 1 102 0
5- 20.05 23 18 1 102 0
5- 20.1 -15 18 1 102 0
5- 18 11 18 1 102 102
2- 22 21 20.1 1 99.9 0
2- 20.1 21 20.1 1 99.9 99.9
5- 20.5 5 20 2 100 0
5- 20.01 15 20 2 100 0
5- 20 -2 20 2 100 50
5- 20 8 20 2 100 50
5- 21 -2 20 2 100 0
2- 20.99 -8 20.99 1 99.01 99.01
2- 21.74 1 20.99 1 99.01 0
5- 20.01 18 19.99 1 100.01 0
5- 19.99 0 19.99 1 100.01 100.01
5- 20.01 7 19.99 1 100.01 0
5- 20 27 19.99 1 100.01 0
5- 25 1 19.99 1 100.01 0
2- 22 25 22 1 98 98
2- 27 17 22 1 98 0
2- 21.75 17 21.75 1 98.25 98.25
2- 21.98 8 21.75 1 98.25 0
2- 20.2 19 20.05 1 99.95 0
2- 20.05 9 20.05 1 99.95 99.95
5- 20.01 23 20 1 100 0
5- 20.93 26 20 1 100 0
5- 20 29 20 1 100 100
5- 20.1 7 20 1 100 0
5- 20.01 17 20 1 100 0
2- 60 16 40 1 80 0
2- 40 14 40 1 80 80
5- 20.01 -21 20.01 2 99.99 49.995
5- 20.1 13 20.01 2 99.99 0
5- 20.05 19 20.01 2 99.99 0
5- 100 22 20.01 2 99.99 0
5- 20.01 21 20.01 2 99.99 49.995
2- 20.05 17 20.01 1 99.99 0
2- 20.01 13 20.01 1 99.99 99.99
5- 20 25 20 4 100 25
5- 20 28 20 4 100 25
5- 20 17 20 4 100 25
5- 20.01 15 20 4 100 0
5- 20 20 20 4 100 25
2- 20.9 7 20.49 1 99.51 0
2- 20.49 -2 20.49 1 99.51 99.51
5- 20.05 -8 20 3 100 0
5- 20 2 20 3 100 33.33333333
5- 20.01 7 20 3 100 0
5- 20 17 20 3 100 33.33333333
5- 20 3 20 3 100 33.33333333
2- 21 29 20.01 1 99.99 0
2- 20.01 21 20.01 1 99.99 99.99
2- 21.6 17 20.25 1 99.75 0
2- 20.25 16 20.25 1 99.75 99.75
2- 20 28 20 1 100 100
2- 20.1 22 20 1 100 0
5- 20.01 22 20 2 100 0
5- 20.1 26 20 2 100 0
5- 20 29 20 2 100 50
5- 20.01 22 20 2 100 0
5- 20 27 20 2 100 50
2- 50 17 50 1 70 70
2- 70 17 50 1 70 0
5- 20.01 20 20 1 100 0
5- 20.02 19 20 1 100 0
5- 20.01 25 20 1 100 0
5- 20 22 20 1 100 100
5- 20.01 22 20 1 100 0
2- 20.1 23 20.01 1 99.99 0
2- 20.01 21 20.01 1 99.99 99.99
5- 20 16 20 4 100 25
5- 20 18 20 4 100 25
5- 20 17 20 4 100 25
5- 20 16 20 4 100 25
5- 21 2 20 4 100 0
2- 20.4 -5 20.4 1 99.6 99.6
2- 20.48 2 20.4 1 99.6 0
5- 20.1 -16 20 3 100 0
5- 20 3 20 3 100 33.33333333
5- 20.01 8 20 3 100 0
5- 20 8 20 3 100 33.33333333
5- 20 6 20 3 100 33.33333333
2- 20 23 20 1 100 100
2- 21 9 20 1 100 0
2- 20.05 10 20.05 1 99.95 99.95
2- 20.23 0 20.05 1 99.95 0
TimeContinueStrictlyWorse StrictlyBetter OutOf Performance TimeOKPerformanceOK
11 0 0 1 0 0
12 - - - - -
12 - - - - -
14 - - - - -
9- - - - -
7- - - - -
10 - - - - -
6- - - - -
6- - - - -
5- - - - -
0- - - - -
5- - - - -
7- - - - -
9- - - - -
9- - - - -
10 - - - - -
6- - - - -
5- - - - -
8- - - - -
7- - - - -
0- - - - -
9- - - - -
0- - - - -
10 - - - - -
12 - - - - -
7- - - - -
8- - - - -
2- - - - -
3- - - - -
6- - - - -
7- - - - -
6- - - - -
11 - - - - -
10 - - - - -
13 - - - - -
10 - - - - -
9- - - - -
0- - - - -
2- - - - -
12 - - - - -
3- - - - -
3- - - - -
8- - - - -
9- - - - -
 8- - - - -
9- - - - -
11 - - - - -
11 - - - - -
6- - - - -
8- - - - -
13 - - - - -
6- - - - -
4- - - - -
11 - - - - -
7- - - - -
12 - - - - -
13 - - - - -
0- - - - -
11 - - - - -
10 - - - - -
9- - - - -
6- - - - -
8- - - - -
5- - - - -
13 - - - - -
12 - - - - -
13 - - - - -
13 - - - - -
12 - - - - -
0- - - - -
2- - - - -
0- - - - -
0- - - - -
3- - - - -
5- - - - -
12 - - - - -
12 - - - - -
12 - - - - -
12 - - - - -
14 - - - - -
10 - - - - -
5- - - - -
2- - - - -
6- - - - -
0- - - - -
12 - - - - -
9- - - - -
12 - - - - -
13 - - - - -
 3- - - - -
12 - - - - -
8- - - - -
11 - - - - -
13 - - - - -
8- - - - -
12 - - - - -
13 - - - - -
12 - - - - -
13 - - - - -
9- - - - -
11 - - - - -
10 - - - - -
13 - - - - -
0- - - - -
0- - - - -
11 - - - - -
11 - - - - -
9- - - - -
12 - - - - -
11 - - - - -
12 - - - - -
13 - - - - -
1- - - - -
3- - - - -
3- - - - -
3- - - - -
6- - - - -
10 - - - - -
6- - - - -
10 - - - - -
12 - - - - -
2- - - - -
13 - - - - -
12 - - - - -
12 - - - - -
10 - - - - -
10 - - - - -
12 - - - - -
14 - - - - -
14 - - - - -
11 - - - - -
13 - - - - -
13 - - - - -
11 - - - - -
11 - - - - -
12 - - - - -
10 - - - - -
0- - - - -
4- - - - -
4- - - - -
1- - - - -
15 - - - - -
13 - - - - -
7- - - - -
4- - - - -
6- - - - -
7- - - - -
9- - - - -
6- - - - -
8- - - - -
6- - - - -
12 - - - - -
14 - - - - -
4- - - - -
14 - - - - -
12 - - - - -
11 - - - - -
11 - - - - -
12 - - - - -
12 - - - - -
10 - - - - -
11 - - - - -
13 - - - - -
14 - - - - -
13 - - - - -
10 - - - - -
14 - - - - -
11 - - - - -
7- - - - -
9- - - - -
10 - - - - -
9- - - - -
6- - - - -
12 - - - - -
13 - - - - -
9- - - - -
6- - - - -
7- - - - -
8- - - - -
12 - - - - -
7- - - - -
11 - - - - -
11 - - - - -
10 - - - - -
13 - - - - -
12 - - - - -
12 - - - - -
10 - - - - -
10 - - - - -
7- - - - -
12 - - - - -
11 - - - - -
12 1 10 12 0.909090909 21
13 3 8 12 2.727272727 20
13 7 3 20 6.052631579 20
11 7 3 20 6.052631579 19
13 3 16 20 1.578947368 21
9 18 1 20 9.473684211 0
10 7 3 20 6.052631579 4
13 11 0 12 10 0
13 10 1 12 9.090909091 0
10 17 2 20 8.947368421 0
10 19 0 20 10 6
10 7 3 20 6.052631579 9
10 7 3 20 6.052631579 9
9 0 19 20 0 27
13 0 11 12 0 22
13 8 3 12 7.272727273 20
12 4 13 20 2.631578947 13
10 4 13 20 2.631578947 15
13 4 13 20 2.631578947 6
11 7 3 20 6.052631579 16
11 2 17 20 1.052631579 13
9 6 5 12 5.454545455 7
10 2 9 12 1.818181818 22
14 7 3 20 6.052631579 17
15 1 18 20 0.526315789 22
9 7 3 20 6.052631579 8
10 7 3 20 6.052631579 23
12 7 3 20 6.052631579 17
11 9 2 12 8.181818182 17
9 7 4 12 6.363636364 15
11 5 6 12 4.545454545 14
11 4 7 12 3.636363636 12
Period Group GroupSize MinimumPrice
1 1 2 60
2 1 2 60
3 1 2 60
4 1 2 60
5 1 2 60
6 1 2 60
7 1 2 60
1 3 2 70 Gr
2 3 2 70
80
3 3 2 70
70
4 3 2 70
60
5 3 2 70

Minimum Price
50
6 3 2 70 40
7 3 2 70 30
1 5 2 40 20
2 5 2 60 10
3 5 2 61 0
1 2
4 5 2 62
5 5 2 63
6 5 2 64
7 5 2 62 Group 1 Gr

1 7 2 29
2 7 2 27.5
3 7 2 25 G
4 7 2 24 80
5 7 2 22 70
6 7 2 21.3 60
7 7 2 20.5 Minimum Price 50
1 2 5 50 40
2 2 5 50 30

3 2 5 50 20
10
4 2 5 50
0
5 2 5 50 1 2
6 2 5 50
7 2 5 50
1 4 5 50 Group 2 G
2 4 5 49
3 4 5 51
4 4 5 52
5 4 5 53
6 4 5 54
7 4 5 55
1 6 5 70
2 6 5 70
3 6 5 70
4 6 5 70
5 6 5 70
6 6 5 70
7 6 5 69.9
1 8 5 20.01
2 8 5 20.01
3 8 5 20
4 8 5 20
5 8 5 20
6 8 5 20
7 8 5 20
 7. (B, 10 points) Do another graph for the markets w
compare the results. Did communication work initial
also work in the long run?
Group Size 2
80
70
60 Communication did work quite well in 2 and 5 siz
& 8 were significant below average but Group 7 w
Minimum Price

50 Group 8 was a 5-group. I actually expected that in

40 price would decrease significantly since there wa
30 penalize in the last round.
20
10
0
1 2 3 4 5 6 7
Period

Group 1 Group 3 Group 5 Group 7

Group Size 5
80
70
60
Minimum Price

50
40
30
20
10
0
1 2 3 4 5 6 7
Period

Group 2 Group 4 Group 6 Group 8

 other graph for the markets with communication and
Did communication work initially in the first rounds? Did it
un?

d work quite well in 2 and 5 size groups. Only Group 7

t below average but Group 7 was a 2-group, while
oup. I actually expected that in the last round the
se significantly since there was no possibility to
round.
Period GroupSize CommunicaMinimumPrice
1 2 0 21
2 2 0 29.99
Expectation
3 2 0 20.05 - Round (The later
4 2 0 24.99 - Market Size (The
5 2 0 20.99 + Communication
6 2 0 20.97 ANOVA
7 2 0 20.9 - Period NOT Sign
1 2 0 20.5 - Group Size NOT S
+ Communication
2 2 0 20.25
3 2 0 20.5
4 2 0 21
5 2 0 21.5
6 2 0 20.1
7 2 0 20.05
1 2 0 22
2 2 0 22.5
3 2 0 20.5
4 2 0 20.02
5 2 0 20.03
6 2 0 20.01
7 2 0 20.01
1 2 0 25
2 2 0 26
3 2 0 25.5
4 2 0 23
5 2 0 22.5
6 2 0 21.95
7 2 0 21
1 5 0 25
2 5 0 23
3 5 0 20.99
4 5 0 20.05
5 5 0 20.01
6 5 0 20.01
7 5 0 20.01
1 5 0 20.99
2 5 0 20.01
3 5 0 20
4 5 0 20
5 5 0 20
6 5 0 20.01
7 5 0 20.01
1 5 0 25
2 5 0 22
3 5 0 20.45
4 5 0 20.01
5 5 0 20.01
6 5 0 20.01
7 5 0 20.01
1 5 0 25
2 5 0 21
3 5 0 20.01
4 5 0 20.01
5 5 0 20.01
6 5 0 20.01
7 5 0 20
1 2 1 60
2 2 1 60
3 2 1 60
4 2 1 60
5 2 1 60
6 2 1 60
7 2 1 60
1 2 1 70
2 2 1 70
3 2 1 70
4 2 1 70
5 2 1 70
6 2 1 70
7 2 1 70
1 2 1 40
2 2 1 60
3 2 1 61
4 2 1 62
5 2 1 63
6 2 1 64
7 2 1 62
1 2 1 29
2 2 1 27.5
3 2 1 25
4 2 1 24
5 2 1 22
6 2 1 21.3
7 2 1 20.5
1 5 1 50
2 5 1 50
3 5 1 50
4 5 1 50
5 5 1 50
6 5 1 50
7 5 1 50
1 5 1 50
2 5 1 49
3 5 1 51
4 5 1 52
5 5 1 53
6 5 1 54
7 5 1 55
1 5 1 70
2 5 1 70
3 5 1 70
4 5 1 70
5 5 1 70
6 5 1 70
7 5 1 69.9
1 5 1 20.01
2 5 1 20.01
3 5 1 20
4 5 1 20
5 5 1 20
6 5 1 20
7 5 1 20
Expectation
- Round (The later, the less possibility to penalize)
- Market Size (The more participants, the less efficient is coordination)
+ Communication dummy (Communication should in reality help)

ANOVA
- Period NOT Significant (85%)
- Group Size NOT Significant (20%)
+ Communication Significant (0%)

Data -> Data Analysis -> Regression --> Y Range = MinPrice /// X Range = Period till communication
Tick Labels to include the heading
I would recommend to select an output range

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.7551477957
R Square 0.5702481934
Adjusted R Square 0.5583106432
Standard Error 13.011871334
Observations 112

ANOVA
df SS MS F
Regression 3 24263.28 8087.759 47.76928135954
Residual 108 18285.35 169.3088
Total 111 42548.63

CoefficientsStandard Error t Stat P-value

Intercept 25.508184524 4.159375 6.132696 0.000
Period -0.1162053571 0.614753 -0.189028 0.850
GroupSize -1.0510119048 0.819671 -1.282237 0.203
Communication 29.264107143 2.459013 11.90076 0.000
 8. (B, 10 points) Run a simple multivariate regression with:
minimum price = alpha
+ beta1 * round
+ beta2 * market size
+ beta3 * communication dummy
+ error term.
Which influences do you expect? Which do you find? Why should
you be careful when interpreting the p-value (significance)?

Significance F
9.917E-20

Lower 95%Upper 95%Lower 95.0%

Upper 95.0%
17.26358 33.75279 17.26358 33.75279
-1.334753 1.102342 -1.334753 1.102342
-2.675742 0.573718 -2.675742 0.573718
24.38992 34.1383 24.38992 34.1383
Period Group GroupSize TotalQuantity Group 2 Group 5
1 1 2 192 66.67 83.35
2 1 2 15 66.67 83.35
3 1 2 21 66.67 83.35
4 1 2 31 66.67 83.35
5 1 2 38 66.67 83.35
6 1 2 45 66.67 83.35
7 1 2 53 66.67 83.35
8 1 2 51 66.67 83.35
9 1 2 52 66.67 83.35
10 1 2 51 66.67 83.35
1 3 2 100
2 3 2 50
3 3 2 35
4 3 2 32.5
5 3 2 32.5
6 3 2 35
7 3 2 35
8 3 2 41
9 3 2 50
10 3 2 50
1 5 2 80
2 5 2 110
3 5 2 85
4 5 2 93
5 5 2 97
6 5 2 100
7 5 2 89
8 5 2 90
9 5 2 90
10 5 2 95
1 7 2 100
2 7 2 95
3 7 2 89.9
4 7 2 89.9
5 7 2 99
6 7 2 90.3
7 7 2 86.9
8 7 2 82.9
9 7 2 87.19
10 7 2 85.85
1 2 5 270
2 2 5 156.5
3 2 5 96.1
4 2 5 99.5
 5 2 5 95
6 2 5 111
7 2 5 82 Market Size 2
8 2 5 89 250
9 2 5 91
200
10 2 5 101

Total Quantity
1 4 5 339 150
2 4 5 145 100
3 4 5 197
50
4 4 5 126
5 4 5 105 0
1 2 3 4 5 6 7 8
6 4 5 129
Period
7 4 5 164.5
8 4 5 218
9 4 5 166 Group 1 Group 3 Group 5
Group 7 Theoretical Value
10 4 5 131
1 6 5 229.01
2 6 5 78
3 6 5 83.5
4 6 5 138
5 6 5 119.5
6 6 5 71
7 6 5 71.49
8 6 5 64.74
9 6 5 75
10 6 5 82.49
1 8 5 348
2 8 5 293
3 8 5 158.99
4 8 5 53
5 8 5 54
6 8 5 61.5
7 8 5 72.5
8 8 5 89
9 8 5 91.5
10 8 5 97
 9. (T, 10 points) Calculate the Cournot equilibria quantities for the duopoly case. For the market w
quantities of 25.00, 20.00, 16.67, 14.92, respectively.

MaxPrice Slope CostPerUnit

120 -1 20

P= 120 - 1Q

Legend Firm 1 _
Revenue Q1 * (120-Q1-Q2)
Costs 20 * Q1
Profit Q1 * (120-Q1-Q2)-20Q1
dy/dx Profit 120 - 2*Q1 - Q2 - 20 =0
Solve for Q Q1 = (100 - Q2)/2

Now plug Q2 = (100-Q1)/2 Function in Q1 to get

Q1 = (100- ((100-Q1)/2)/2
Q1 = 50-((50-0.5Q1)/2)
Q1= 50- 25-0.25Q1
0.75Q1 =25
Q1 = (25/0.75) 33.3333333333333
Since Firm 1 is equal to Firm 2 Q1 =Q2 = 33.33 (the equilibrium quantity)

Equilibrium Price
P= 120- 1* (Q1+Q2) =120-66.67= 53.33

# Group members Equlibria quantities

2 33.33
3 25
4 20
5 16.67
6 14.92

10. (B, 10 points) For every market size draw graphs with the development of the total quantity over
the rounds. Add a line for the theoretical total quantity (don’t forget to multiply the optimal solution
given in 1. with the number of market participants). Do the results come close to the theoretical
solutions?
 the rounds. Add a line for the theoretical total quantity (don’t forget to multiply the optimal solution
given in 1. with the number of market participants). Do the results come close to the theoretical
solutions?

arket Size 2 Group Size 5

400
350
300

Total Quantity
250
200
150
100
50
4 5 6 7 8 9 10 0
1 2 3 4 5 6 7 8 9 10
Period Period

Group 3 Group 5
Group 2 Group 4 Group 6
Theoretical Value
Group 8 Theoretical Value

They come closer, but you can't see them reaching the equilibrium, in the
market size 2 scenario. In Size 5, it seems that except group 4, they are
reaching equilibrium.

11. (T and B, 5 points) Which market model Bertrand do you consider more realistic, Cournot or
Bertrand? Hint: The answer “none of them” is not an option. It is a relative comparison.

Bertrand is more realistic if you can differentiate products, cournot is more realistic if the products are
equal. "None of them" would have been my favourite option, but if I have to decide, then Cournot is
leading, because getting 0 units sold is quite unrealistic, there are some search costs/transaction costs
which have to make it more realistic.
Given this models ceteris paribus, I think Cournot wins.
s for the duopoly case. For the market with 3, 4, 5, and 6 participants the symmetric equilibria are

MaxQuantity
120

Firm 2
Q2 *(120-Q1-Q2) Revenue = Price *q
20* Q2 Costs = MC *q
Q2 *(120-Q1-Q2)-20Q Profit = Revenue - Costs
120 - 2*q2 - q1 - 20 =0
Q2 = (100 - Q1)/2 Second derivate to check Maximum
-2 --> Max

Total Quantity
66.67
75.00
80.00
83.35
89.52

development of the total quantity over

forget to multiply the optimal solution
sults come close to the theoretical
 forget to multiply the optimal solution
sults come close to the theoretical

e5

6 7 8 9 10
d

Group 6
Value

reaching the equilibrium, in the

hat except group 4, they are

c, Cournot or
rison.

c if the products are

de, then Cournot is
sts/transaction costs