Crude oil is transported across the globe in enormous tanker ships called Very Large Crude Carriers (VLCCs). By 2001, more than 92% of all new VLCCs...

1.     Crude oil is transported across the globe in enormous tanker ships called Very Large Crude Carriers (VLCCs). By 2001, more than 92% of all new VLCCs were built in South Korea and Japan. Assume that the price of new VLCCs (in millions of dollars) is determined by the function P=180 – Q, where . Assume that cost of building each ship is $30 million in both Korea and Japan. That .

(a)  Write the profit function for each country in terms of  and either . Find each country’s best-response function.

(b)  Using the best-response function, find the Nash Equilibrium?

What if now China joins the market  and .

(c)  Write the profit function for each country in terms of  and either . Find each country’s best-response function.

(d)  Using the best-response function, find the Nash Equilibrium?