If the firms in a Courot duopoly merge forming a monopoly, the effect on price, profit, and other variables depends on the trade-off between efficiency and market power. The firms produce identical products. Firm 1 has a constant marginal cost of $1, and Firm 2 has a constant marginal cost of $2. The market demandi Q=45-p. The Cournot-Nash equilibrium occurs where q, equals 15 and ₂ equals 14. (Enter numeric responses using real numbers rounded to two decimal places.) Furthermore, the equilibrium occurs at a price of $ Firm 1 receives profit of $ 225 and Firm 2 receives profit of $ 196. Consumer surplus equals $ If the firms merge and produce at the lower marginal cost, then the new equilibrium occurs where market output (Q) is. The new equilibrium price is $. The merged firm's profit is $. Consumer surplus is now $
If the firms in a Courot duopoly merge forming a monopoly, the effect on price, profit, and other variables depends on the trade-off between efficiency and market power. The firms produce identical products. Firm 1 has a constant marginal cost of $1, and Firm 2 has a constant marginal cost of $2. The market demandi Q=45-p. The Cournot-Nash equilibrium occurs where q, equals 15 and ₂ equals 14. (Enter numeric responses using real numbers rounded to two decimal places.) Furthermore, the equilibrium occurs at a price of $ Firm 1 receives profit of $ 225 and Firm 2 receives profit of $ 196. Consumer surplus equals $ If the firms merge and produce at the lower marginal cost, then the new equilibrium occurs where market output (Q) is. The new equilibrium price is $. The merged firm's profit is $. Consumer surplus is now $
Chapter15: Imperfect Competition
Section: Chapter Questions
Problem 15.5P
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