7. Nash equilibrium: shopping, standing and voting on a line

submitted by Professor Huzzaz on 07/17/13 1

Game Theory (ECON 159) We first consider the alternative "Bertrand" model of imperfect competition between two firms in which the firms set prices rather than setting quantities. Then we consider a richer model in which firms still set prices but in which the goods they produce are not identical. We model the firms as stores that are on either end of a long road or line. Customers live along this line. Then we return to models of strategic politics in which it is voters that are spread along a line. This time, however, we do not allow candidates to choose positions: they can only choose whether or not to enter the election. We play this "candidate-voter game" in the class, and we start to analyze both as a lesson about the notion of equilibrium and a lesson about politics. 00:00 - Chapter 1. Bertrand Duopoly: Standard Model 28:18 - Chapter 2. Bertrand Duopoly: Product Differentiation 40:13 - Chapter 3. Perfect Competition Revisited: The Candidate Voter Model Complete course materials are available at the Open Yale Courses website: open.yale.edu/courses This course was recorded in Fall 2007.

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