Sep 19, 2017


This paper concentrates on the primary theme of (COMPETITIVE PRODUCT MARKET INTERACTIONS). THERE IS A MASS 1 OF IDENTICAL ENTREPRENEURS WITH THE… in which you have to explain and evaluate its intricate aspects in detail. In addition to this, this paper has been reviewed and purchased by most of the students hence; it has been rated 4.8 points on the scale of 5 points. Besides, the price of this paper starts from £ 40. For more details and full access to the paper, please refer to the site.

(competitive product market interactions). There is a mass 1 of identical entrepreneurs with the variable-investment technology described in Section 3.4. The representative entrepreneur has wealth A, is risk neutral, and is protected by limited liability. Denote the average investment by I and the individual investment i (in equilibrium i = I by symmetry but we need to distinguish the two in a first step in order to compute the competitive equilibrium). A project produces Ri units of goods when successful and 0 when it fails. The probability of success is pH in the case of good behavior (the entrepreneur receives no private benefit) and pL = pH − ∆p in the case of misbehavior (the entrepreneur then receives private benefit Bi). Assume that it is optimal to induce the entrepreneur to behave. The market price of output is P = P (Q), with P

Show that the equilibrium is unique. Compute the equilibrium level of investment. (Hint: distinguish two cases, depending on whether A is large or small.)

100% Plagiarism Free & Custom Written,
Tailored to your instructions

International House, 12 Constance Street, London, United Kingdom,
E16 2DQ

UK Registered Company # 11483120

100% Pass Guarantee

Order Now


We've produced some samples of what you can expect from our Academic Writing Service - these are created by our writers to show you the kind of high-quality work you'll receive. Take a look for yourself!

View Our Samples

FLAT 25% OFF ON EVERY ORDER.Use "FLAT25" as your promo code during checkout