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 to merge or not?
Does such a merger in which the two firms are just indifferent between merging and not merging increase consumer surplus? Briefly explain your response.
Homework Answers
Add Answer to:
Consider a homogeneous-product Cournot
oligopoly with four firms. Suppose that the inverse demand function
is P(Q)...
1. Consider a three firm (n = 3) Cournot oligopoly. The market inverse demand function is p (Q) = 24 Q. Firm 1 has constant average and marginal costs of $12 per unit, while firms 2 and 3 have constan...
1. Consider a three firm (n = 3) Cournot oligopoly. The market inverse demand function is p (Q) = 24 Q. Firm 1 has constant average and marginal costs of $12 per unit, while firms 2 and 3 have constant average and marginal costs of $15 per unit. a)Verify that the following are Nash equilibrium quantities for this market: q1 = 9 / 2 and q2 = q3 = 3 / 2 . b)How much profit does each firm earn...
A Cournot oligopoly has 2 firms, and inverse market demand P = 60 - Q. All...
A Cournot oligopoly has 2 firms, and inverse market demand P = 60 - Q. All firms have marginal cost 20 . The equilibrium price in this market will be （PLEASE SHOW ME STEP） $20.50 $22 $33.33 $40.15
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...
Consider the following oligopoly model. The market demand is p(Q) = 100−Q. There are three identical...
Consider the following oligopoly model. The market demand is p(Q) = 100−Q. There are three identical firms 1, 2 and 3 producing the homogeneous product. Each firm has a constant marginal cost of 0. The three firms choose their outputs simultaneously , without observing the quantity decisions by others. Find the Cournot-Nash equilibrium in this model. Obtain the profits in equilibrium for each firm.
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 that the only two firms in an industry face the market (inverse) demand curve p-...
Suppose that the only two firms in an industry face the market (inverse) demand curve p- 130-Q. Each has constant marginal cost equal to 4 and no fixed costs. Initially the two firms compete as Cournot rivals (Chapter 11) and each produces an output of 42. Why might these firms want to merge to form a monopoly? What reason would antitrust authorities have for opposing the merger? (Hint: Calculate price, profits, and total surplus before and after the merger.) The...
[Cournot competition with N firms] There are three identical firms in the industry. The inverse demand...
[Cournot competition with N firms] There are three identical firms in the industry. The inverse demand function is p(Q-1-Q, where Q = q1 +92+93 denotes aggregate output. To facilitate your calculations, assume that the marginal cost for all firms is zero, c 0· 2. (a) Find the best response function for each firm. Interpret b) Compute the Cournot equilibrium. (c) Assume that two of the three firms merge (transforming the industry into a duopoly). Show that the profit of the...
You are asked to perform a merger simulation. Suppose inverse demand is P=360-Q. a) There are...
You are asked to perform a merger simulation. Suppose inverse demand is P=360-Q. a) There are three firms in the industry: A, B and C. The firms have costs of zero. Suppose the three firms pick quantities simultaneously. That is, they play a Cournot game. What quantities do the firms choose? What is the price? Hint: In this case, Q=QA+QB+Qc. Compute MR for each of the three firms, and then derive three best response functions, and then solve the three...
I. Consider a three firm (n = 3) Cournot oligopoly. The market inverse demand function is...
I. Consider a three firm (n = 3) Cournot oligopoly. The market inverse demand function is P()-24 Q. Firm 1 has constant average and marginal costs of $12 per unit, while firms 2 and 3 have constant average and marginal costs of $15 per unit. p (Q) (a) Verify that the following are Nash equilibrium quantities for this market: q,-. and g2 = g3 We were unable to transcribe this image
Consider an industry composed of four firms which produce a homogeneous good with inverse demand ...
Consider an industry composed of four firms which produce a homogeneous good with inverse demand P(Y) 100-Y where Y - Notice that this set-up implies the firms compete in quantities. The firms have similar c(y) 20y production costs defined as a) Compute firm profits from the Nash equilibrium. b) Show that a merger between firms one and two is not profitable. c) Suppose that a merger between firms one and two will generate cost synergies s where s is a...
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 that the only two firms in an industry face the market (inverse) demand curve p- 130-Q. Each has constant marginal cost equal to 4 and no fixed costs. Initially the two firms compete as Cournot rivals (Chapter 11) and each produces an output of 42. Why might these firms want to merge to form a monopoly? What reason would antitrust authorities have for opposing the merger? (Hint: Calculate price, profits, and total surplus before and after the merger.) The...
[Cournot competition with N firms] There are three identical firms in the industry. The inverse demand function is p(Q-1-Q, where Q = q1 +92+93 denotes aggregate output. To facilitate your calculations, assume that the marginal cost for all firms is zero, c 0· 2. (a) Find the best response function for each firm. Interpret b) Compute the Cournot equilibrium. (c) Assume that two of the three firms merge (transforming the industry into a duopoly). Show that the profit of the...
You are asked to perform a merger simulation. Suppose inverse demand is P=360-Q. a) There are three firms in the industry: A, B and C. The firms have costs of zero. Suppose the three firms pick quantities simultaneously. That is, they play a Cournot game. What quantities do the firms choose? What is the price? Hint: In this case, Q=QA+QB+Qc. Compute MR for each of the three firms, and then derive three best response functions, and then solve the three...
I. Consider a three firm (n = 3) Cournot oligopoly. The market inverse demand function is P()-24 Q. Firm 1 has constant average and marginal costs of $12 per unit, while firms 2 and 3 have constant average and marginal costs of $15 per unit. p (Q) (a) Verify that the following are Nash equilibrium quantities for this market: q,-. and g2 = g3 We were unable to transcribe this image
Consider an industry composed of four firms which produce a homogeneous good with inverse demand P(Y) 100-Y where Y - Notice that this set-up implies the firms compete in quantities. The firms have similar c(y) 20y production costs defined as a) Compute firm profits from the Nash equilibrium. b) Show that a merger between firms one and two is not profitable. c) Suppose that a merger between firms one and two will generate cost synergies s where s is a...
Most questions answered within 3 hours.
-
A telephone survey uses a random digit dialing machine to call
subjects. The random digit dialing...
asked 23 minutes ago -
How can having too little or too much of a certain
protein cause problems for an...
asked 1 hour ago -
Assume a muscle has a PCSA = 20 cm2 and Lo = 12 cm. Assume it...
asked 3 hours ago -
What is the yield to maturity of a ten-year, $1,000 bond with a
5.2% coupon rate...
asked 4 hours ago -
A mass m = 5 kg is tied on one end of a rope and is...
asked 4 hours ago -
The Average sales price of single-family houses in Charlotte is
$210,000 with a standard deviation of...
asked 4 hours ago -
Target Costing
Laser Impressions, Inc., manufactures color laser printers.
Model J20 presently sells for $225 and...
asked 4 hours ago -
a bottle cap manufacturer with four machines and six operators
wants to see if variation in...
asked 5 hours ago -
State Farm Insurance studies show that in Colorado, 55% of the
auto insurance claims submitted for...
asked 5 hours ago -
Complete the following reactions which form ethers (A
and B) and cyclic ethers (C-E) as major...
asked 6 hours ago -
in a perfectly elastic collision what is the velocity of ball A
if the original direction...
asked 6 hours ago -
PLEASE ANSWER ALL
1) The pressure of the atmosphere decreases with increasing
altitude in the
Choose...
asked 6 hours ago