Duopoly with product differentiation in which the demand and cost functions are q1=88-4p1+2p2
c1=10q1,
q2=56+2p1-4p2
c2=8q2
for the firm I and II respectively
Derive the price reaction functions for each firm on the assumption that each maximises its profits with respect to its own price. Determine the equilibrium price, quantity and profit for each firm.
Kindly elaborate the steps along with the books referred. Thanks
Duopoly with product differentiation in which the demand and cost functions are q1=88-4p1+2p2 c1=10q1, q2=56+2p1-4p2 c2=8q2...
The inverse demand in a Cournot duopoly is P = a - b (Q1 + Q2), and costs are C1(Q1) = c1Q1 and C2(Q2) = c2Q2. The government has imposed a per unit tax of $t on each unit sold by each firm. The equilibrium price of each firm is the same as a situation where: a. each firm’s demand increases by t. b. each firm’s demand decreases by t. c. each firm’s marginal cost increases by t. d. each...