Consider the setting of in-text exercise 19.1 (page 714). If the fixed costs associated with being active in this market are $30,000 per year, how many firms will enter the market?
Exercise 19.1
Suppose Joe, Louie, and Rebecca compete in the Bertrand ready-mix concrete market described in Section 19.2. Show that in any Nash equilibrium, all sales must occur at a price of $40 (equal to marginal cost). Extend your argument to show that this statement will be true as long as two or more firms are competing in the market.