Suppose two firms, A and B, have a cost function of ?(??) = 30??, for ? = ?, ?. The inverse demand for the market is given by ? = 120 − ?, where Q represents the total quantity in the market, ? = ?? + ??.1. Solve for the firms’ outputs in a Nash Equilibrium of the Cournot Model.2. Let Firm A be the first mover, and Firm B be the second mover. Solve for the firms’ outputs in a SPNE of the Stackelberg Model. Suppose two firms, A and B, have a cost function of C(q.) = 30qi, for i = A, B. The inversedemand for the market is given byp = 120 – Q, where Q represents the total quantity in themarket, Q = qA + qB-a. Solve for the firms' outputs in a Nash Equilibrium of the Coumot model.b. Let Firm A be the first mover, and Firm B be the second mover. Solve for the firms'outputs in a SPNE of the Stackelberg model.

An oligopoly is a form of market where there are a few sellers with a large number of buyers.…

Answered: Suppose two firms, A and B, have a cost…

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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Suppose two firms, A and B, have a cost function of ?(?_?) = 30?_?, for ? = ?, ?. The inverse demand for the market is given by ? = 120 − ?, where Q represents the total quantity in the market, ? = ?_? + ?_?.

1. Solve for the firms’ outputs in a Nash Equilibrium of the Cournot Model.

2. Let Firm A be the first mover, and Firm B be the second mover. Solve for the firms’ outputs in a SPNE of the Stackelberg Model.

Suppose two firms, A and B, have a cost function of C(q.) = 30qi, for i = A, B. The inverse
demand for the market is given byp = 120 – Q, where Q represents the total quantity in the
market, Q = qA + qB-
a. Solve for the firms' outputs in a Nash Equilibrium of the Coumot model.
b. Let Firm A be the first mover, and Firm B be the second mover. Solve for the firms'
outputs in a SPNE of the Stackelberg model.

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