Suppose that identical duopoly firms have constant marginal costs of $0 per unit. Firm 1 faces a demand function of q1 = 100 – 2p1 + p2, where q1 is Firm 1’s output, p1 is Firm 1’s price, and p2 is Firm 2’s price. Similarly, the demand Firm 2 faces is q2 = 100 – 2p2 + p1. Please solve for the Bertrand equilibrium.

Suppose that identical duopoly firms have constant marginal costs of $0 per unit. Firm 1 faces a demand function of q1 = 100 – 2p1 + p2, where q1 is Firm 1’s output, p1 is Firm 1’s price, and p2 is Firm 2’s price. Similarly, the demand Firm 2 faces is q2 = 100 – 2p2 + p1. Please solve for the Bertrand equilibrium.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.3P

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