Consider a market with two firms in Cournot (quantity) competition. Market demand is given by q(p)...
Consider a market with two firms in Cournot (quantity) competition. Market demand is given by q(p) = a − p. Each firm faces a constant marginal cost of c. a. (15 points) Suppose that the government imposes a unit tax of δ, so that if a firm sells q units of the good, that firm owes q · δ to the government. Find the equilibrium quantity, price paid by consumers, consumer surplus, and tax revenue. Your answers should be functions of a, τ , and c. Make sure you box your answers.
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Consider a market with two firms in Cournot (quantity)
competition. Market demand is given by q(p)...
3. Cournot competition: The inverse demand for a homogeneous good is given by p(Q) = 100...
3. Cournot competition: The inverse demand for a homogeneous good is given by p(Q) = 100 - Q if Q< 100 and p(Q) = 0 if Q > 100, where p is the price in the market and Q > 0 is the total quantity supplied in the market. There are two firms, labeled 1 and 2, each of which produce the good at a constant marginal cost of 10 per unit. There are no fixed costs. Denoting the output...
EC202-5-FY 10 9Answer both parts of this question. (a) Firm A and Firm B produce a homogenous good and are Cournot duopolists. The firms face an inverse market demand curve given by P 10-Q. where...
EC202-5-FY 10 9Answer both parts of this question. (a) Firm A and Firm B produce a homogenous good and are Cournot duopolists. The firms face an inverse market demand curve given by P 10-Q. where P is the market price and Q is the market quantity demanded. The marginal and average cost of each firm is 4 i. 10 marks] Show that if the firms compete as Cournot duopolists that the total in- dustry output is 4 and that if...
Suppose there are two firms, 1 and 2, competing in quantity. The market demand is p...
Suppose there are two firms, 1 and 2, competing in quantity. The market demand is p = 15-(q1 +q2), where q1 and q2 are the quantities produced by rms 1 and 2. Both rms have constant marginal cost c1 = c2 = 3. (a) [10] Find the Cournot equilibrium of this market. Compute the consumer surplus in equilibrium. b) Now suppose firms 1 and 2 merge, so that they become a monopolist with demand function p = 15 ? q,...
Suppose the two firms cannot collude and instead compete in the Cournot Model in the market...
Suppose the two firms cannot collude and instead compete in the Cournot Model in the market described in question 1 (market demand is still Q=18-P) with the same cost (C(Q)=1/2 *Q^2). Set up firm 1’s profit maximization. Solve for firm 1’s best response function. Solve for firm 1’s quantity, firm 2’s quantity, the equilibrium market quantity, and price. Show your work. Is this a Nash equilibrium? Do consumers prefer the Cournot competition equilibrium over the collusion of the two firms...
2. (Cournot Model) Consider a Cournot duopoly. The market demand is p=160 - q2. Firm 1's...
2. (Cournot Model) Consider a Cournot duopoly. The market demand is p=160 - q2. Firm 1's marginal cost is 10, and firm 2's marginal cost is also 10. There are no fixed costs. A. Derive each firm's best response function B. What is the Nash equilibrium of this model? Find the equilibrium market price. C. Find the equilibrium profit for each firm D. Find the equilibrium consumer surplus in this market. 3. (Bertrand Model) Consider a Bertrand duopoly. The market...
Consider a homogeneous-product Cournot oligopoly with four firms. Suppose that the inverse demand function is P(Q)...
Consider a homogeneous-product Cournot oligopoly with four firms. Suppose that the inverse demand function is P(Q) = 64 – Q. Suppose that firms incur a constant marginal cost c = 4. Characterize the equilibrium of the game in which all firms simultaneously choose quantity. Suppose that firms 1 and 2 consider merging and that there are synergies leading to marginal costs cm < c. Characterize the new market equilibrium. At what level of cm are the two firms indifferent whether...
5. Cournot Competition Consider a Coumot duopoly model. Suppose that market demand is P-a-qi Also suppose that the cost functions of the two firms are TG (q) = q, and T( (a) Write the profit func...
5. Cournot Competition Consider a Coumot duopoly model. Suppose that market demand is P-a-qi Also suppose that the cost functions of the two firms are TG (q) = q, and T( (a) Write the profit function, and the first order condition. (b) Find out the profit maximizing output for each firm. (c) Find the pofit earned by each firm, total profit eamed by the two fims to (d) Now assume that the two firms collude and act as a monopoly....
Suppose we have a market with two firms, and market demand Q = 18 - P...
Suppose we have a market with two firms, and market demand Q = 18 - P and a cost c(Q) =Q2. Suppose that firm 1 has first mover advantage. a. What do we call a market where two firms move sequentially? b. Set up and solve for firm 1's output, firm 2's output, market output, and equilibrium price. Show all work for each step. C. Do consumers prefer this over the Cournot equilibrium? d. Does firm 2 prefer this type...
the market demand is p=18-Q the market demand is p=18-q p=18-q NAME: Note: you can use...
the
market demand is p=18-Q
the
market demand is p=18-q
p=18-q
NAME: Note: you can use your notes and a calculator. Problem 1. 10 points. Two firms compete under Cournot competition with constant marginal costs = 2 and = 4. The market demand is. a) Compute the market share of each firm, the market price, and the total quantity produced in the market. b) [CHALLENGING) You later hear that the marginal cost of firm 2 increased, and realize that the...
Problem 2. Cournot Competition with Three Firms Suppose there are three identical firms engaged in quantity competition...
Problem 2. Cournot Competition with Three Firms Suppose there are three identical firms engaged in quantity competition. The demand is P=1-Q where Q = 91 +92 +93. To simplify, assume that the marginal cost of production is zero. Compute the Cournot equilibrium (i.e., quantities, price, and profits).
3. Cournot competition: The inverse demand for a homogeneous good is given by p(Q) = 100 - Q if Q< 100 and p(Q) = 0 if Q > 100, where p is the price in the market and Q > 0 is the total quantity supplied in the market. There are two firms, labeled 1 and 2, each of which produce the good at a constant marginal cost of 10 per unit. There are no fixed costs. Denoting the output...
EC202-5-FY 10 9Answer both parts of this question. (a) Firm A and Firm B produce a homogenous good and are Cournot duopolists. The firms face an inverse market demand curve given by P 10-Q. where P is the market price and Q is the market quantity demanded. The marginal and average cost of each firm is 4 i. 10 marks] Show that if the firms compete as Cournot duopolists that the total in- dustry output is 4 and that if...
2. (Cournot Model) Consider a Cournot duopoly. The market demand is p=160 - q2. Firm 1's marginal cost is 10, and firm 2's marginal cost is also 10. There are no fixed costs. A. Derive each firm's best response function B. What is the Nash equilibrium of this model? Find the equilibrium market price. C. Find the equilibrium profit for each firm D. Find the equilibrium consumer surplus in this market. 3. (Bertrand Model) Consider a Bertrand duopoly. The market...
5. Cournot Competition Consider a Coumot duopoly model. Suppose that market demand is P-a-qi Also suppose that the cost functions of the two firms are TG (q) = q, and T( (a) Write the profit function, and the first order condition. (b) Find out the profit maximizing output for each firm. (c) Find the pofit earned by each firm, total profit eamed by the two fims to (d) Now assume that the two firms collude and act as a monopoly....
Suppose we have a market with two firms, and market demand Q = 18 - P and a cost c(Q) =Q2. Suppose that firm 1 has first mover advantage. a. What do we call a market where two firms move sequentially? b. Set up and solve for firm 1's output, firm 2's output, market output, and equilibrium price. Show all work for each step. C. Do consumers prefer this over the Cournot equilibrium? d. Does firm 2 prefer this type...
the
market demand is p=18-Q
the
market demand is p=18-q
p=18-q
NAME: Note: you can use your notes and a calculator. Problem 1. 10 points. Two firms compete under Cournot competition with constant marginal costs = 2 and = 4. The market demand is. a) Compute the market share of each firm, the market price, and the total quantity produced in the market. b) [CHALLENGING) You later hear that the marginal cost of firm 2 increased, and realize that the...
Problem 2. Cournot Competition with Three Firms Suppose there are three identical firms engaged in quantity competition. The demand is P=1-Q where Q = 91 +92 +93. To simplify, assume that the marginal cost of production is zero. Compute the Cournot equilibrium (i.e., quantities, price, and profits).
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