Question 1: Suppose Southwest (S) and JetBlue (J) choose a number of flights, and qj respectively, from Chicago to New York. They both have the same constant arginal cost of 12. For Q = qs + qj, the market demand function for flights is p= 60 – 2Q (1) Suppose the airlines choose quantity simultaneously. Find the Cournot Nash Equilibrium quantities. (2) Suppose the airlines choose price simultaneously. Find the Bertrand Nash Equilibrium. (3) Suppose Southwest and JetBlue collude in the quantities they choose to obtain monopoly profits. Assuming they split the market evenly, what quantity does

Question 1: Suppose Southwest (S) and JetBlue (J) choose a number of flights, and qj respectively, from Chicago to New York. They both have the same constant arginal cost of 12. For Q = qs + qj, the market demand function for flights is p= 60 – 2Q (1) Suppose the airlines choose quantity simultaneously. Find the Cournot Nash Equilibrium quantities. (2) Suppose the airlines choose price simultaneously. Find the Bertrand Nash Equilibrium. (3) Suppose Southwest and JetBlue collude in the quantities they choose to obtain monopoly profits. Assuming they split the market evenly, what quantity does

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.1P

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