forces at play: and effects. cubic Hotelling; competition; market size quadratic Hotelling; competition; market size quadratic Hotelling; cooperation; market size linear Hotelling: compe
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- (Collusive Duopoly Model) There are two firmsproducing widgets. It costs the first firm q1 dollars to produceq1 widgets and the second firm 0.5q2 2 dollars to produce q2widgets. If a total of q widgets are produced, consumerswill pay $200 q for each widget. If the two manufacturerswant to collude in an attempt to maximize the sum of theirprofits, how many widgets should each company produce?COURSE: MICROECONOMICS - Stackelberg ModelIn a given market good there are only 2 firms that satisfy the demand, and their respective total cost functions are: CTi = 400 and the demand that is estimated is P = 120 - 2QIf the exception variable of both firms is the quantity they will produce, such that the decisions to produce are made sequentially firm number 1 will be the leader who decides the quantity to produce and firm number 2 (follower) decides based on the production of firm number 1, we ask:(a) quantity produced by each firm and its equilibrium price in the market.(b) Profit of each company at equilibrium and (c) Graph your resultsConsider the differentiated goods Bertrand price competition model where firms A and B produce similar goods and sell them at pA and pB. The demand for each firm’s product is given byqA =60−2pA +pB andqB =60–2pB +pA ,and there are NO costs of producing either good (all costs are 0). (a)Calculate the (Bertrand) equilibrium prices and the net profits of each firm (b) Now suppose that -instead of competing to maximize their own individual profits- the firms decide to “collude” and set prices pA and pB to maximize their joint profits (sum of their profits). What would be each firm’s optimal price and net profits? Compare these prices and profits with what you found in (a) (greater/smaller/the same?).
- Ellen publishes a book titled "First Place", which included a chapter from Frank's copyrighted book "Great Racear Drivers" without his permission. Ellen's use of the chapter is actionable regardless of whether consumers are confused or Ellen and Frank are competitors only if the consumers are confused only if Ellen and Frank are competitors only if consumers are confused and Ellen and Frank are competitorsWhat are the key trade offs of imperfect competition? Group of answer choices 1-The monopolistically competitive market structure provides powerful incentives for innovation, but they never achieve productive efficiency in the long run. 2-The monopolistically competitive market structure provides powerful incentives for innovation, but the strongest firms in a monopolistically competitive market become oligopolists. 3-The monopolistically competitive market structure fails to achieve allocative efficiency, but the firms all face perfectly elastic demand curves. 4-The monopolistically competitive market structure allows firms to achieve economic profit in the short run, but the individual firms all face perfectly elastic demand curves.It is argued that firms differentiate their products and sustain positive profits while other firms imitate and drive down their profits in the competitive business environments. Would you defend or refute the economic argument above? Explain your position. Do research on a firm’s product innovation to demonstrate the concept of product differentiation (i.e. a real-life example of a firm’s product of which a bundle of characteristics that differs from any existing product).
- Assume the market for a product can be described as a Cournot duopoly with two identical firms. The Nash-equilibrium in this market is that the two firms produce the same quantity. Hence, they will have identical market shares, each will have 50%. Assume that firm 1 decides to invest in a technology that reduces its marginal costs. a) What will happen to the two firms market shares? You must explain how you find the answer. b) What will happen to total production and the price of the product? Again, explain your answer.Define pure and mixed strategies. Discuss their main difference. Given two examples to illustrate this.In an economy with two Individuals ( A and B) discuss the results in exchange in the following situations 1. Perfect competition in which A and B accept prices as given by the market 2.A is a monopolistic and can set any price B chooses 3 A is a perfect price discriminator and can charge a different price for each unit tranded. 4 does each of these lead to a pareto efficient Solution ? It would be useful to work with an Edgeworth Box Diagram to present your solution
- In a Cournot model, firms Go and Stop compete by producing good X. Demand is X = 50 - 0.5P, where P is price. The two firms have zero cost. If firm Go believes that firm Stop will produce 20 units, then firm Go's optimal reaction is produce _____ units Please do it fast ASAP .... FastThis is a Microeconomics problem. I need help for part (d). Two firms A and B operating in the same market must choose between a collude price and a cheat price. Answer the following questions in order. (a) Does Firm A have a dominant strategy? Explain your answer. (b) Does Firm B have a dominant strategy? Explain your answer. (c) Is there an equilibrium solution to the above game? (d) Is this equilibrium solution to the game the most "ideal" outcome for the players? Explain clearly why or why not.Exercise 6.6. Consider a duopoly in which companies compete according to Cournot's model. The inverse market demand curve is: P(Q)=100-Q , where Q=Q1+Q2 and the average and marginal costs of firms are constant and equal to 40 Calculate profits would each company make? How much would company 1 be willing to invest to reduce its CM from 40 to 25, assuming company 2 does not support it? Graphically show and comment on all results.
