Question 5 (a) Why does a monopolist typically produce a different amount compared to what could be produced under a competitive market structure, and in what sense is it inefficient? (b) Compare and contrast the non-cooperative and cooperative outcomes when duopolists are involved in quantity competition. (c) Provide an example of a one-shot game where no Nash equilibrium in pure strategies exists.

Question 5 (a) Why does a monopolist typically produce a different amount compared to what could be produced under a competitive market structure, and in what sense is it inefficient? (b) Compare and contrast the non-cooperative and cooperative outcomes when duopolists are involved in quantity competition. (c) Provide an example of a one-shot game where no Nash equilibrium in pure strategies exists.

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: Oligopoly

Section: Chapter Questions

Problem 6CQQ

See similar textbooks

Similar questions

16-1. Two equal sized newspaper have an overlap in circulation of 10% (10% of the subscribers subscribe to both newspaper). Advertisers are willing to pay $10 to advertise in one newspaper but only $19 to advertise in both , because they’re are unwilling to pay twice to reach the same subscribers. What’s the likely bargaining negotiation outcome if the advertisers bargain by telling each newspaper that they’re going to reach an agreement with the other newspaper so the gains to reaching agreement are only $9? Suppose the two newspaper merge. What is the likely post merger bargaining outcome?
9.17. Number of competitors. Consider an n firm homogeneous-good oligopoly with constant marginal cost, the same for all firms. Let d ̄ be the minimum value of the dis- count factor such that it is possible to sustain monopoly prices in a collusive agreement. Show that d ̄ is decreasing in n. Interpret the result.
Assuming that the monopolistic competitor faces the demand and costs depicted below and finds the profit maximizing level of output, what will be the firm's total cost? Question 28 options: a) $128 b) $156 c) $136 d) $108
Practice Problem 1: Two firms produce homogeneous goods with constant marginal costs c = 2. The market demand in each period is P(Q) =10 - Q where Q is output. (a) Compute Cournot (quantity competition) profits in this market (for which you need to compute output and prices, of course).(b) Compute the monopoly profit in this market. That is, what a firm with the same cost function would make if it were the only one in the market (and what a cartel of the two firms would decide to produce in this market).(c) Suppose that one firm produces half the output that you computed in (b). Compute the best response of the other firm, and explain why in one period an agreement between the two firms to produce each half the monopoly output (and so get half the monopoly profit) would not be honored..
Suppose that Bieber and Rihanna are duopolists in the music industry. In May, they agree to work together as a monopolist, charging the monopoly price for their music and producing the monopoly quantity of songs. By June, each singer is considering breaking the agreement. Assuming Bieber and Rihanna are rational, what would one expect to happen next? Question 36 options: a Bieber and Rihanna will determine that it is in each singer's self interest to maintain the agreement. b Bieber and Rihanna will each break the agreement. Both singers' profits will decrease. c Bieber and Rihanna will each break the agreement. Both singers' profits will increase. d Bieber and Rihanna will each break the agreement. The new equilibrium quantity of songs will increase, and the new equilibrium price also will increase.
3 1. Describe the bidding process by which the electricity generation sector provides electricity to pooling and balancing authorities. Additionally, show this process by building an electricity supply curve. a. What antitrust and regulation concerns are present at the wholesale stage of the electricity market? b. Describe a market design that reduces market manipulation in wholesale electricity markets. Show that the Nash equilibrium under this market design will result in generators bidding their true marginal cost of production. c. Describe a vertically integrated industry as it pertains to the electricity sector. d. Describe non-linear (two part) pricing as it pertains to retail electricity sales. What is the purpose of this pricing system?
D2) Explain this concept and give one practical example(oligopoly)
Exercise 3: merger example Algoma Steel Inc. and Stelco Steel Inc. Merger? Suppose you work at the Bureau and your task is to assess a proposed merger between Algoma Steel Inc. and Stelco Steel Inc. For simplicity, these are the only two firms in Canada. The cost of this merger is that the two firms will become one joint firm, or the duopolists become the monopolist. This is likely to limit consumer choices and the equilibrium price is likely to rise. However, this merger is likely to increase economies of scale, or production cost will fall. From existing studies you know the following information, and P is the price per ton of steel and Q is the number of tons of steel. Demand for steel: P = 1,800 - Q Marginal revenue: MR = 1,800 - 2Q Supply of steel: MC = ATC = 600, identical across the two firms. Case #1: Before Merger - Cournot duopoly - the government does not intervene The total surplus (TS), defined as the sum of consumer surplus and producer surplus, is equal to…
16-1 Newspaper Bargaining Two equal-sized newspapers have an overlap in circulation of 10% (10% of the subscribers subscribe to both newspapers). Advertisers are willing to pay $10 to advertise in one newspaper but only $19 to advertise in both, because they’re unwilling to pay twice to reach the same subscribers. What’s the likely bargaining negotiation outcome if the advertisers bargain by telling each newspaper that they’re going to reach an agreement with the other newspaper, so the gains to reaching agreement are only $9? Suppose the two newspapers merge. What is the likely post-merger bargaining outcome? these would be most advantageous from a bargaining position?
1. Based on the best available econometric forecasts, market elasticity demand for your company's products is -2.5. Marginal cost to produce product is constant at $ 140. Determine the optimal price per unit, if: a.You are a monopolist. b.You compete with one another in the Cournot oligopoly. c.You are competing with 9 other companies in the Cournot oligopoly. 2. The water pump company has succeeded in introducing a water pump that saves electricity, is easy to install, and is durable (guaranteed). Its high quality has given the company an early edge in the local and national markets, but the entry of highly skilled competitors may occur within the next 3 years. Assume that the income and expense relationship of the company is as follows: TR = 22000Q - 15.6Q2 MR = dTR / dQ = 22000 - 31.2Q TC = 300000 + 4640Q + 10Q2 MC = dTC / dQ = 4640 + 20Q Where TR is income (in thousands of rupiah), Q is quantity (in units), MR is marginal income (in thousands of rupiah), TC is total cost,…
ANS ME ! 1 In a completely serious market, the interaction of section or leave closes when a. Firms are working with abundance limit. b. Firms are making zero monetary benefit. c. Firms experience diminishing minimal income. d. Cost is equivalent to minor expense. 2. Harmony amounts in business sectors described by oligopoly is a. Lower than in imposing business model business sectors and higher than in completely serious markets. b. Lower than in imposing business model business sectors and lower than in completely serious markets. c. Higher than in imposing business model business sectors and higher than in completely serious markets.
1. Based on the best available econometric estimates, the market elasticity of demand for your firmâ€™s product is -2.5. The marginal cost of producing the product is constant at $100, while average total cost at current production levels is $175. Determine your optimal per unit price if: Instruction:Round your answers to two decimal places. a. You are a monopolist. $ b. You compete against one other firm in a Cournot oligopoly. $ c. You compete against 19 other firms in a Cournot oligopoly. $ 2. You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Group 1â€™s elasticity of demand is -2, while group 2â€™s is -6. Your marginal cost of producing the product is $10. a. Determine your optimal markups and prices under third-degree price discrimination. Instruction:Round your answers to two decimal places. Markup for group 1: Price for group 1: $ Markup for group 2: Price for group…