Instructions for Setting a Price

You will now decide simultaneously and independently what price to charge. You are free to choose any price above 0.

Only the firm with the lowest price sells any units on the market. The total number of units sold in the market is determined in the following way:

Total number of units sold = {{ C.MAX_DEMAND }} – Lowest price on the market

If the lowest price was set by more than one firm, those firms divide the market demand between themselves.

Example:
If firm A sets a price of 40, while firms B and C both set a price of 35, then firm A sells 0 units in the market, while firms B and C sell: ({{ C.MAX_DEMAND }} – 35) / 2 = 32.5 units each.

If another firm has a lower price than you, your profit will be 0. If you have the lowest price, your profit will be:

Your profit = Lowest price × Total units sold / Number of firms with the lowest price

Every round, there is a 15% chance that your cartel is discovered and fined by the competition authority. If discovered, your fine is based on your {{ session.config.mode }} from that round:

{% if session.config.mode == 'profit' %} Fine = {{ C.PROFIT_RATE }} * Profit this round {% elif session.config.mode == 'revenue' %} Fine = {{ C.REVENUE_RATE }} * Revenue this round {% elif session.config.mode == 'overcharge' %} Fine = {{ C.OVERCHARGE_RATE }} * Overcharge this round {% endif %}

For your convenience, these instructions will be available to you every time you must decide on what price to set.