Suppose that identical duopoly firms have constant marginal costs of $10 per unit. Firm I 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 function Firm 2 faces is q2 = 100 - 2p2 + P₁. Solve for the Nash-Bertrand equilibrium.

Suppose that identical duopoly firms have constant marginal costs of $10 per unit. Firm I 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 function Firm 2 faces is q2 = 100 - 2p2 + P₁. Solve for the Nash-Bertrand equilibrium.

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: Oligopoly

Section: Chapter Questions

Problem 2QCMC

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