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Question 2 (60 points) Consider two following Cournot competition between two firms, Firm 1 and Firm...
8. Suppose two long-lived firms are engaged on repeated Cournot competition. The firms have a common...
8. Suppose two long-lived firms are engaged on repeated Cournot competition. The firms have a common discount factor 8. Each period, firms choose simultaneously how much to produce. Suppose that each firm can only choose between a high output (H), or a low output (L). The stage game payoffs are as follows. HL H 4,4 1,6 L 6,1 2,2 (a) Which actions are dominated in the stage game? (b) Which outcomes are Pareto dominated in the stage game? (c) Find...
3. There are two firms that compete according to Cournot competition. Firm 1 has a cost...
3. There are two firms that compete according to Cournot competition. Firm 1 has a cost function G(91) = 5.59+12. Firm 2 has a cost function C(q2) = 2.5q3 + 18. These firms cannot discriminate, so there is just one price that is determined by the aggregate demand. The inverse demand equation is P(Q) = 600 – 0 Where total supply Q-q1+92. (e) Use your best response equations to mathematically solve for the equilibrium quantities qi 9, Q". equilibrium price...
2. Consider a Cournot competition model with two firms, 1 and 2. They produce identical goods...
2. Consider a Cournot competition model with two firms, 1 and 2. They produce identical goods in the same market with demand function P= 100-5Q with Q=91 +92. Furthermore, their production process generates pollution to the environment, which increases their cost of production. Their cost functions are given by C1(91,92) = 109,- +5Q and C291,92) = 15922 +45Q. a (10pts) Calculate their equilibrium quantities, price, and profits for both firms. b. (5pts) Consider they collude and form a cartel. That...
Problem 1. Cournot Competition with Two Firms Suppose there are two identical firms engaged in quantity competition (Co...
Problem 1. Cournot Competition with Two Firms Suppose there are two identical firms engaged in quantity competition (Cournot competition). The demand is P=1-Q where Q =91 +92. Assume that firm's i total cost of production is TC(qi) Compute the Cournot equilibrium (i.e., quantities, price, and profits).
Mathematical Question 3 (30pts) 3. Consider two firms are performing Cournot price competition in two differentiated...
Mathematical Question 3 (30pts) 3. Consider two firms are performing Cournot price competition in two differentiated goods markets. Firm 1 produces goods 1, and firm 2 produces goods 2, and two market demand functions are given by 91 (P1,P2) = 12-2p1 + P2 and 921,P2) = 12-2p2 + P 1. Furthermore, assume that the two firms have the same cost function such that fixed cost is $20 and variable cost is zero. a. (10pts) Calculate the equilibrium prices, quantities and...
7. There are two firms that compete according to Cournot competition. Firm 1 has a cost...
7. There are two firms that compete according to Cournot competition. Firm 1 has a cost function C1(91) = 2491 +5. Firm 2 has a cost function C(92) = 1022 +10. These firms cannot discriminate, so there is just one price that is determined by the aggregate demand. The inverse demand equation is P(Q) = 80 - Where total supply Q = 91 +92. (a) Setup the profit maximization problem for firm 1 with all necessary equations plugged in. (2...
Consider a Cournot competition with two firms, A and B. The marginal costs of each firm...
Consider a Cournot competition with two firms, A and B. The marginal costs of each firm is MCA = MCB = 40. The inverse demand function is P = 130 - Q. Find the Nash equilibrium quantities for each firm and the market price.
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....
= Consider an industry consisting of two firms which produce a homogeneous commodity. The industry demand...
= Consider an industry consisting of two firms which produce a homogeneous commodity. The industry demand function is Q = 100 – P, where Q is the quantity demanded and P is its price. The total cost functions are given as C1 = 50q1 for firm 1, and C2 = 60qz for firm 2, where Q 91 +92. a. (6 points) Suppose both firms are Cournot duopolists. Find and graph each firm's reaction function. What would be the equilibrium price,...
Mathematical Question 2 (20pts) 2. Consider a Cournot competition model with two firms, 1 and 2....
Mathematical Question 2 (20pts) 2. Consider a Cournot competition model with two firms, 1 and 2. They produce identical goods in the same market with demand function P= 100-5Q with Q=91 +92- Furthermore, their production process generates pollution to the environment, which increases their cost of production. Their cost functions are given by C191,92) = 1091- +5Q and C291,92) = 15922 +45Q. a. (10pts) Calculate their equilibrium quantities, price, and profits for both firms. b. (5pts) Consider they collude and...
8. Suppose two long-lived firms are engaged on repeated Cournot competition. The firms have a common discount factor 8. Each period, firms choose simultaneously how much to produce. Suppose that each firm can only choose between a high output (H), or a low output (L). The stage game payoffs are as follows. HL H 4,4 1,6 L 6,1 2,2 (a) Which actions are dominated in the stage game? (b) Which outcomes are Pareto dominated in the stage game? (c) Find...
3. There are two firms that compete according to Cournot competition. Firm 1 has a cost function G(91) = 5.59+12. Firm 2 has a cost function C(q2) = 2.5q3 + 18. These firms cannot discriminate, so there is just one price that is determined by the aggregate demand. The inverse demand equation is P(Q) = 600 – 0 Where total supply Q-q1+92. (e) Use your best response equations to mathematically solve for the equilibrium quantities qi 9, Q". equilibrium price...
2. Consider a Cournot competition model with two firms, 1 and 2. They produce identical goods in the same market with demand function P= 100-5Q with Q=91 +92. Furthermore, their production process generates pollution to the environment, which increases their cost of production. Their cost functions are given by C1(91,92) = 109,- +5Q and C291,92) = 15922 +45Q. a (10pts) Calculate their equilibrium quantities, price, and profits for both firms. b. (5pts) Consider they collude and form a cartel. That...
Problem 1. Cournot Competition with Two Firms Suppose there are two identical firms engaged in quantity competition (Cournot competition). The demand is P=1-Q where Q =91 +92. Assume that firm's i total cost of production is TC(qi) Compute the Cournot equilibrium (i.e., quantities, price, and profits).
Mathematical Question 3 (30pts) 3. Consider two firms are performing Cournot price competition in two differentiated goods markets. Firm 1 produces goods 1, and firm 2 produces goods 2, and two market demand functions are given by 91 (P1,P2) = 12-2p1 + P2 and 921,P2) = 12-2p2 + P 1. Furthermore, assume that the two firms have the same cost function such that fixed cost is $20 and variable cost is zero. a. (10pts) Calculate the equilibrium prices, quantities and...
7. There are two firms that compete according to Cournot competition. Firm 1 has a cost function C1(91) = 2491 +5. Firm 2 has a cost function C(92) = 1022 +10. These firms cannot discriminate, so there is just one price that is determined by the aggregate demand. The inverse demand equation is P(Q) = 80 - Where total supply Q = 91 +92. (a) Setup the profit maximization problem for firm 1 with all necessary equations plugged in. (2...
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....
= Consider an industry consisting of two firms which produce a homogeneous commodity. The industry demand function is Q = 100 – P, where Q is the quantity demanded and P is its price. The total cost functions are given as C1 = 50q1 for firm 1, and C2 = 60qz for firm 2, where Q 91 +92. a. (6 points) Suppose both firms are Cournot duopolists. Find and graph each firm's reaction function. What would be the equilibrium price,...
Mathematical Question 2 (20pts) 2. Consider a Cournot competition model with two firms, 1 and 2. They produce identical goods in the same market with demand function P= 100-5Q with Q=91 +92- Furthermore, their production process generates pollution to the environment, which increases their cost of production. Their cost functions are given by C191,92) = 1091- +5Q and C291,92) = 15922 +45Q. a. (10pts) Calculate their equilibrium quantities, price, and profits for both firms. b. (5pts) Consider they collude and...
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