homogenous-good duopoly faces an inverse market demand function of p = 150 − Q. Assume that both firms face the same constant marginal cost, MC1 = MC2 = 30. Calculate the output of each firm, the market output, and the market price in a Nash-Cournot equilibrium Re-solve part (a) assuming that the marginal cost of firm 1 falls to MC1 =20 Explain what will happen to each firm’s output, the market output, and the market price if the two firms can collude (e.g., form a
homogenous-good duopoly faces an inverse market demand function of p = 150 − Q. Assume that both firms face the same constant marginal cost, MC1 = MC2 = 30. Calculate the output of each firm, the market output, and the market price in a Nash-Cournot equilibrium Re-solve part (a) assuming that the marginal cost of firm 1 falls to MC1 =20 Explain what will happen to each firm’s output, the market output, and the market price if the two firms can collude (e.g., form a
Chapter15: Imperfect Competition
Section: Chapter Questions
Problem 15.4P
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- A homogenous-good duopoly faces an inverse
market demand function of p = 150 − Q.
- Assume that both firms face the same constant marginal cost, MC1 = MC2 = 30. Calculate the output of each firm, the market output, and the market price in a Nash-Cournot equilibrium
- Re-solve part (a) assuming that the marginal cost of firm 1 falls to MC1 =20
- Explain what will happen to each firm’s output, the market output, and the market price if the two firms can collude (e.g., form a cartel)
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