Problem Set 2 Prof. Gene Chang (For Ph. D students, due on Dec. 9th in the class or TA's office. For M.A. students, due on Dec. 12th, in the class or TA's office. Late turn-in may result in penalty in the grade) 1. The production set is={yy2):y2sy,-
Then =1-91=1(3+:2)(3+2n 可=-1-3)=1(4-+2)(1-2+a With 1 0 O: Thus, in equilibrium, we must have ai=.2. In fact, the two firms must sit in the middle By Proposition 2.1, Pi=p?=c Discussion