Question Four fa duopolist has a linear demand curve of the form Q=400 – P. Assuming each firm has total cost (TC=3000+100Q). Calculate the profit-maximizing price-quantity combinations using the wo oligopoly pricing models listed below demonstrating that: A. Under the Cournot model, both firms will earn same level of profit and determine industry profit and explain why this is would be the case. 3. Under the Stackelberg model the leader will earn more than twice the profit of the follower and that total industry profits will be lower than under both Cournot models. Explain why this is vould be the case.

Question Four fa duopolist has a linear demand curve of the form Q=400 – P. Assuming each firm has total cost (TC=3000+100Q). Calculate the profit-maximizing price-quantity combinations using the wo oligopoly pricing models listed below demonstrating that: A. Under the Cournot model, both firms will earn same level of profit and determine industry profit and explain why this is would be the case. 3. Under the Stackelberg model the leader will earn more than twice the profit of the follower and that total industry profits will be lower than under both Cournot models. Explain why this is vould be the case.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.1P

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