![[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 two merging firms decreases but the profit of the unmerged firm increases. Explain. (d) Assume now that all three firms merge. Show that the profits of all firms increase. Interpret your results in parts (c) and (d)](http://img.homeworklib.com/questions/3e07ef70-50a9-11ea-b7d1-2d38c69010a7.png?x-oss-process=image/resize,w_560)
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[Cournot competition with N firms] There are three identical firms in the industry. The inverse demand...
3. [Cournot mergers with efficiency gains] Consider an industry with three identical firms each selling a...
3. [Cournot mergers with efficiency gains] Consider an industry with three identical firms each selling a homogenous good and producing at a cost c> 0. Industry demand is given by p(Q)1-Q, where Q1 2+93 denotes aggregate output. Competition in the marketplace is in quantities (a la Cournot) (a) Find the equilibrium quantities, price and profits (b) Consider now a merger between two of the three firms, resulting in duopolistic structure of the market. The merger might give rise to efficiency...
Problem 2. Cournot Competition with Three Firms Suppose there are three identical firms engaged in quantity competition...
Problem 2. Cournot Competition with Three Firms Suppose there are three identical firms engaged in quantity competition. The demand is P=1-Q where Q = 91 +92 +93. To simplify, assume that the marginal cost of production is zero. Compute the Cournot equilibrium (i.e., quantities, price, and profits).
Two identical firms compete as a Cournot duopoly. The inverse market demand they face is P...
Two identical firms compete as a Cournot duopoly. The inverse market demand they face is P = 120-2Q. The total cost function for each firm is TC1(Q) = 4Q1. The total cost function for firm 2 is TC2(Q) = 2Q2. What is the output of each firm? Find: Q1 = ? Q2 = ?
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...
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 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...
Consider a Cournot duopoly, the firms face an (inverse) demand function: Pb = 41500 - 98...
Consider a Cournot duopoly, the firms face an (inverse) demand function: Pb = 41500 - 98 Qb. The marginal cost for firm 1 is given by mc1 = 1137 Q. The marginal cost for firm 2 is given by mc2 = 813 Q. What quantity will of output will the duopoly produce ? (Assume firm 1 has a fixed cost of $ 9150 and firm 2 has a fixed cost of $ 400 .) Ans. 66.69
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...
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....
Answer the following question. Please show all your working/explanation. Three firms compete a la Cournot (compete...
Answer the following question. Please show all your working/explanation. Three firms compete a la Cournot (compete in a Cournot Competition). Each firm has constant marginal cost c. Inverse demand curve is 1 - Q, where Q is the total quantity. Firm 1 moves first, and chooses q1 . After firm 1 chooses q1, firms 2 and 3 move second and simultaneously choose q2 and q3 . Find the equilibrium quantities q1, q2, q3 .
3. [Cournot mergers with efficiency gains] Consider an industry with three identical firms each selling a homogenous good and producing at a cost c> 0. Industry demand is given by p(Q)1-Q, where Q1 2+93 denotes aggregate output. Competition in the marketplace is in quantities (a la Cournot) (a) Find the equilibrium quantities, price and profits (b) Consider now a merger between two of the three firms, resulting in duopolistic structure of the market. The merger might give rise to efficiency...
Problem 2. Cournot Competition with Three Firms Suppose there are three identical firms engaged in quantity competition. The demand is P=1-Q where Q = 91 +92 +93. To simplify, assume that the marginal cost of production is zero. Compute the Cournot equilibrium (i.e., quantities, price, and profits).
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...
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....
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