Strategy #2: Firm 1 drives Firm 2 out of the market Consider an alternative strategy where Firm 1 produces a quantity that results in Firm 2 producing nothing. Calculate the minimum quantity that Firm 1 would have to produce to drive Firm 2 out of the market, the resulting market price, and Firm 1's profits. Firm 1's quantity: q₁ = 240.00 units. (Enter your response rounded to two decimal places.) Equilibrium price: P = 35.00. (Enter your response rounded to two decimal places.) Firm 1's profits: ₁ = $0.00. Firm 1 would need to continue producing at the higher level you found under Strategy #2 to keep Firm 2 out of the market. Comparing Firm 1's profits under the strategies, what is the optimal strategy for Firm 1, the Stackelberg leader, to use? A. Strategy 1 OB. Strategy 2
Strategy #2: Firm 1 drives Firm 2 out of the market Consider an alternative strategy where Firm 1 produces a quantity that results in Firm 2 producing nothing. Calculate the minimum quantity that Firm 1 would have to produce to drive Firm 2 out of the market, the resulting market price, and Firm 1's profits. Firm 1's quantity: q₁ = 240.00 units. (Enter your response rounded to two decimal places.) Equilibrium price: P = 35.00. (Enter your response rounded to two decimal places.) Firm 1's profits: ₁ = $0.00. Firm 1 would need to continue producing at the higher level you found under Strategy #2 to keep Firm 2 out of the market. Comparing Firm 1's profits under the strategies, what is the optimal strategy for Firm 1, the Stackelberg leader, to use? A. Strategy 1 OB. Strategy 2
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter12: Price And Output Determination: Oligopoly
Section: Chapter Questions
Problem 2E
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