(1) Let us assume that in Region X, there are only 2 hospitals available and that they act as Cournot duopolists. MC₁ MC₂ = 10 Market demand Q = 100-0.5p (a) Compute for the best response functions of each hospital. (b) Compute for the best output level for each. (c) Suppose the 2 hospitals decide to collude, what will be the new output level? Show.

(1) Let us assume that in Region X, there are only 2 hospitals available and that they act as Cournot duopolists. MC₁ MC₂ = 10 Market demand Q = 100-0.5p (a) Compute for the best response functions of each hospital. (b) Compute for the best output level for each. (c) Suppose the 2 hospitals decide to collude, what will be the new output level? Show.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter16: Government Regulation

Section: Chapter Questions

Problem 2E

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