Suppose two firms cannot collude and compete in the Cournot Model. Market demand is Q =...
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...
3. 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)=Q2). a. Set up firm 1's profit maximization. b. Solve for firm 1's best response function. C. Solve for firm 1's quantity, firm 2's quantity, the equilibrium market quantity, and price. Show your work. d. Is this a Nash equilibrium? e. Do consumers prefer the Cournot...
Suppose we have a market demand Q = 18 – P and a cost C(Q) 9) = 3Q?. (10 points) 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) = -23. 2 a. Set up firm 1's profit maximization. b. Solve for firm 1's best response function. C. Solve for firm 1's quantity, firm 2's quantity,...
Suppose we have two firms with the same cost C(q) = {Q2 in a market which demand is Q 18 – P, the two firms compete in the Cournot Model. a. Set up firm 1's profit maximization and best response function. b. Solve for firm 1's quantity, firm 2's quantity, the equilibrium market quantity, and price. Please show your work. c. Is this a Nash equilibrium?
3. 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)=Q2). e. Do consumers prefer the Cournot competition equilibrium over the collusion of the two firms in question 3? f. Do the two firms prefer Cournot competition over colluding (assuming the collusion agreement is to split joint profits equally)?
Consider a market with two firms. Suppose that that firm 2 that invests in a new technology that changes it cost structure from firm 1. Market demand is Q = 18 – P, firm 1 faces costs G; (21) = {Q}, and firm 2 has costs, Cz (22) = 3. Consider a Cournot. a. What is firm l's best response function? b. Set up firm 2's profit maximization and solve for firm 2's best response function. c. Find the equilibrium...
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...
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...
Suppose we have a market demand Q = 18 – P and a cost C(Q) 9) = 3Q?. Suppose that that firm 2 that invests in a new technology that changes it cost structure from firm 1. Market demand is still Q = 18 – P, firm 1 still faces costs 1 f(0) == Q}, and now firm 2 has costs, C3(Qx) = 23. Consider a Cournot model again. a. What is firm 1's best response function? b. Set up...
(16 points) Cournot Duopoly. Market demand is p(Q) = 50 – 4Q, where Q = 4+ 42. Firm 1's cost function is C (91) = 0, and firm 2 has a cost function C2(92) = 1092- The two firms engage in Cournot competition; they simultaneously choose a quantity and the price adjusts so that the market clears. (a) Formally write firm 1's profit maximization problem (b) Find firm l's best response function. (c) Take as given that firm 2's best...