Suppose two firms compete in Cournot competition. The market inverse demand curve is ? = 200...
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Suppose two firms compete in Cournot competition. The market inverse demand curve is ? =
200 − ?1 − ?2. Firm 1 and firm 2 face the same marginal cost curve, ?? = 20. Therefore, profit for firm 1 is ?1 = (200 − ?1 − ?2)?2 − 20?1 and similarly for firm 2.
a. Solve for the Cournot price, quantity, and profits.
b. Suppose firm 1 is thinking about investing in technology that can reduce its costs to $15per unit. Therefore, their profit function would be ?1 = (200 − ?1 − ?2)?2 − 15?1. Firm 2’s profit function remains the same. A. Find the new Cournot price, quantity, and profits. B. How much should firm 1 be willing to pay for this investment?
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Suppose two firms compete in Cournot competition. The market
inverse demand curve is ? =
200...
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3. Suppose the two firms cannot collude and instead compete in the Cournot Model in the...
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Suppose two firms cannot collude and compete in the Cournot Model. Market demand is Q =...
Suppose two firms cannot collude and compete in the Cournot Model. Market demand is Q = 18 – P with the cost (c(Q) =*Q). a. Set up firm l's profit maximization. b. Solve for firm l's best response function. c. Solve for firm l's quantity, firm 2's quantity, the equilibrium market quantity, and price. Show your work. d. Is this a Nash equilibrium?
Can someone help with the problem below? Suppose two oligopolistic firms face a market (inverse) demand curve P(Y + Y2...
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Suppose two oligopolistic firms face a market (inverse) demand curve P(Y + Y2) = 20 - (Y1 + Y). Both firms produce at constant marginal cost, but they are not symmetric: firm 1 has marginal cost 2 and firm 2 has marginal cost 4. For each of the following competitive situations below, compute: • The equilibrium price. • The equilibrium quantities produced by each firm. • The profits received by each firm. (a)...
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[Cournot competition with N firms] There are three identical firms in the industry. The inverse demand...
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Problem 3. Cournot Competition with Different Costs Suppose there are two firms engaged in quantity competition....
Problem 3. Cournot Competition with Different Costs Suppose there are two firms engaged in quantity competition. The demand is P = 2 - Q where Q =q1+q2. Assume ci = 1 and c2 = , i.e., Firm 2 is more efficient. Compute the Cournot equilibrium (i.e., quantities, price, and profits).
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 two firms cannot collude and compete in the Cournot Model. Market demand is Q = 18 – P with the cost (c(Q) =*Q). a. Set up firm l's profit maximization. b. Solve for firm l's best response function. c. Solve for firm l's quantity, firm 2's quantity, the equilibrium market quantity, and price. Show your work. d. Is this a Nash equilibrium?
Can someone help with the problem below?
Suppose two oligopolistic firms face a market (inverse) demand curve P(Y + Y2) = 20 - (Y1 + Y). Both firms produce at constant marginal cost, but they are not symmetric: firm 1 has marginal cost 2 and firm 2 has marginal cost 4. For each of the following competitive situations below, compute: • The equilibrium price. • The equilibrium quantities produced by each firm. • The profits received by each firm. (a)...
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[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...
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Problem 3. Cournot Competition with Different Costs Suppose there are two firms engaged in quantity competition. The demand is P = 2 - Q where Q =q1+q2. Assume ci = 1 and c2 = , i.e., Firm 2 is more efficient. Compute the Cournot equilibrium (i.e., quantities, price, and profits).
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