The graph below is intended to repre- sent the welfare effect of a merger in which prices change from a premerger competitive price p, to a postmerger price pm, where both firms charged the same price premerger and were profitable and where both firms faced marginal costs c, before the merger
Q: The figure below shows the market conditions facing two firms, Brooks, Inc., and Spring, Inc., in…
A: Since you have posted multiple subparts, as per the Bartleby guidelines we can solve only the first…
Q: All question are with regards to the following set up. There are two firms A and B. Firms. compete…
A: Given information Demand function P=18-qa-qb C=3q Firm B is domestic firm Firm A is foreign firm…
Q: There are two different market under the Galata Bridge. One of them is fried fish sandwich and the…
A: NOTE: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…
Q: (6) For each situation, solve for the Cournot-Nash equilibrium (Capacity Constraints) 6a) Suppose…
A:
Q: Assuming two players in the market, with the assumption that each control half of the market…
A: The following problem has been solved as follows:
Q: Consider a homogeneous good duopoly with linear demand P(Q) = 12-Q, where Q is the total industry…
A: Given information Two firms are producing identical goods in duopoly market. P=12-Q Firms having…
Q: 1. Consider a market with three firms (i = 1, 2, 3), which have identical marginal costs c = c2 = C3…
A: There are n=3 firms in the market. The firms have identical cost structures with MC=0 and the market…
Q: The figure below shows the market conditions facing two firms, Brooks, Inc., and Spring, Inc., in…
A: The profit maximizing condition for a monopolist is MR=MC that is Marginal Revenue= Marginal cost.…
Q: 1. Consider a market with three firms (i = 1, 2, 3), which have identical marginal costs C1 = c2 =…
A: the inverse demand function is given by P= 1-Q
Q: Match the definition to each term listed below. Definition Number A table that nhows the payoffa…
A: a) Repeated games, often called as supergames. These are those games that repeat themselves again…
Q: There are two different market under the Galata Bridge. One of them is fried fish sandwich and the…
A: Given, PF = 100-qF+ -0.5qp => qF = 100-PF+ 0.5
Q: The European Union decides to subsidize the European producer, Airbus, with $25M if it enters the…
A: Subsidies are given to reduce the production cost and encourage producer to produce more . Subsidies…
Q: Consider a market structure comprising two identical firms (A and B), each with the cost function…
A: Market demand : P = 210 − 1.5Q, where Q = QA + QB Firm A P = 210-1.5QA-1.5QB…
Q: Suppose an industry has 50 firms, each with an equal 2 percent share of the market. According to the…
A: We will use the formula to calculate Herfindhal Hirschman Index (HHI)
Q: Compare and contrast Price and Quantity determination in a strategic situation like an oligopoly and…
A: The purely competitive is a market where there are a large number of companies selling homogenous or…
Q: Question #6: Consider a Cournot duopoly, the firms face an (inverse) demand function: Pb = 432 - 7…
A: b
Q: Assume the following facts concerning the horizontal merger model developed by Oliver Williamson.…
A: A monopoly market is one that has a single seller and the goods have no close substitutes. Sellers…
Q: Consider a duopolistic market with two firms, A and B, facing a market demand curve of P=100-qA –qB…
A: We are going to use game theory concepts such as Best response to answer this question.
Q: uppose that the market demand for a certain product is given by P=370−2QP=370−2Q, where QQ is total…
A:
Q: Three firms are bidding for the rights to provide cable television services. The demand for cable…
A: Given, Demand function : P = 100 - Q Firm 1 AC : AC1 = 10 Total Cost = 10 Q Firm 2 AC : AC 2 =…
Q: Firms J and K produce compact-disc players and compete against one another. Each firm can develop…
A: A game is defined as a strategic situation model in which players make strategic decisions implying…
Q: You are the manager in a market composed of eight firms, each of which has a 12.5 percent market…
A: The Herfindahl-Hirschman Index or the HHI index is a most commonly used measure of concentration in…
Q: Consider a Cournot duopoly with the inverse demand P = 260 2Q. Two Örms compete choosing their…
A: Duopoly refers to a specific form of oligopoly where there are only 2 producers who sell a good with…
Q: There are two firms A and B. Firms compete in a Cournot Duopoly in Karhide. They set quantities qA…
A: The cost is divided into two categories that are fixed cost and variable cost. The total fixed cost…
Q: A market has the following demand function: P = 120 –Q where Qe = Ei-1 Qi a) Assuming Cournot-Nash…
A: Profit = 120 - 1/2*(Qt) Qt = ∑i = 13Qt
Q: "Z" earns price "Z" earns $3 million $1 million ("Z") "W" earns "W" earns $1 million $2 million Low…
A: In the oligopoly market, the firms have massively interdependent. Action of one firm decides the…
Q: The figure below shows the market conditions facing two firms, Brooks, Inc., and Spring, Inc., in…
A: In a Bertrand duopoly, the firms compete in prices setting them equal to their marginal costs. A…
Q: Suppose two firms compete as Bertrand duopolists for an identical product, where demand is given by…
A: In the Bertrand oligopoly model, the duopolists or both firms determine their price simultaneously.…
Q: Consider an industry with two identical firms (denoted firm 1 and 2) producing a homogenous good.…
A:
Q: Consider a Stackelberg game played by 3 firms: firm 1 moves first, then firm 2, and finally firm 3.…
A: The Stackelberg model is a management strategy that permits the dominant firm to establish its price…
Q: All question are with regards to the following set up. There are two firms A and B. Firms compete in…
A: There is no subsidy so this is a normal Cournot case with two firms and the same cost. Profit =…
Q: 1. Consider a market with three firms (i = 1, 2, 3), which have identical marginal costs C1 = c2 =…
A: We are going to find the Cournot equilibrium Price and quantity, Profit for merged firms in both…
Q: 1. Consider a market with three firms (i = 1, 2, 3), which have identical marginal cost C1 = c2 = C3…
A: P= 1-Q π = (1-q1-q2-q3)q1 π = q1-q12 -q1q2-q1q3 dπ1/dq1 = 1-2q₁-q2-q3 = 0 2q₁ + q2 + q3 =…
Q: Suppose the market for a certain good is controlled by a single firm I (incumbent). Now, a second…
A: Since you have posted multiple questions, we will answer the first two questions for you. If you…
Q: The figure below shows the market conditions facing two firms, Brooks, Inc., and Spring, Inc., in…
A: Initial Marginal cost is denoted from MC0 New Marginal cost is denoted from MC1
Q: Consider the following Stackelberg duopoly. Both firms produce differentiated goods. For form 1, the…
A: Stackelberg duopoly is a model in which leader can make first move and follower can make other one ,…
Q: Now suppose United Air Lines enters the Atlanta market. Consider this to be an oligopoly market with…
A: A firm maximizes its profit by producing at the output level where MC=MR
Q: Suppose that two firms produce a particular (homogeneous) product. The inverse demand function for…
A: Answer- Given in the question- P = 100 -Q Q = Q1 + Q2 Q1 = Quantity of Firm 1 Q2 = Quantity of Firm…
Q: All question are with regards to the following set up. There are two firms A and B. Firms compete in…
A:
Q: Assume that two companies (C and D) are duopolists that produce identical products. Demand for the…
A: Given, TCC=15,000+50QC TCD=10,000+75QD P = 1000 – QC - QD
Q: 7. Jie is a firm manager deciding its sales quantity strategy. His firm is in a market with another…
A: Given the market inverse demand: P = 16 - Q Jie's cost function, c(q) = q24
Q: Please indicate whether you agree with the statement given below and explain why? According to…
A: The Williamson tradeoff model basically refers to a theoretical model in industrial organisation…
Q: The figure below shows the market conditions facing two firms, Brooks, Inc., and Spring, Inc., in…
A: Initial Marginal cost is denoted from MC0 New Marginal cost is denoted from MC1
Q: Two firms compete repeatedly in a market of homogeneous goods. Each year, the firms can choose to…
A: A Repeated Trigger strategy game is defined as the one in which if a player tends to cooperate the…
Q: Three firms are bidding for the rights to provide cable television services. The demand for cable…
A: Demand function : P = 100 - Q Firm 1 AC : AC1 = 10 Total Cost = 10 Q Firm 2 AC : AC 2 = 20 TC =…
Q: Suppose that the Department of Justice (DOJ) vetoes all mergers that are likely to lead to an…
A: We are going to solve for equilibrium output at competitive scenario and monopoly scenario to answer…
4.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images
- Sometimes oligopolies in the same industry are very different in size. Suppose we have a duopoly where one firm (Film A) is large and the other film (Film B) is small, as the prisoners dilemma box in Table 10.4 shows. Assuming that both films know the payoffs, what is the likely outcome in this case?Does each individual in a prisoners dilemma benefit more from cooperation or from pursuing self-interest? Explain briefly.Part c please Suppose four Cournot competitors face an inverse market demand curve of P = 1620 – 8Q, each with identical costs Ci = 4000 + 60qi. Use the formulae given in exercise 8.15 (pgs. 214-15) for firm profits, market price, and consumer surplus at a Cournot equilibrium to answer the following questions. a. Demonstrate that a merger between F3 and F4 will not be profitable if their costs remain unchanged. (Careful: the “n” in the profit formula changes from 4 to 3.) b. Could the merger be profitable i. if fixed costs fell? If so, how much reduction is necessary? ii. If the variable costs of the merged firm fell by 75%, so that C3|4 = 8000 + 15q? (Fixed cost remains 8000 because we are assuming only variable costs fall.) c. Calculate the consumer surplus created in this market when there are four identical firms. How does it change after a merger occurs between F3 and F4 if: i. no costs savings occur ii. the merged firm reduces its fixed costs by $6000 iii. the merged firm…
- Part d please Suppose four Cournot competitors face an inverse market demand curve of P = 1620 – 8Q, each with identical costs Ci = 4000 + 60qi. Use the formulae given in exercise 8.15 (pgs. 214-15) for firm profits, market price, and consumer surplus at a Cournot equilibrium to answer the following questions. a. Demonstrate that a merger between F3 and F4 will not be profitable if their costs remain unchanged. (Careful: the “n” in the profit formula changes from 4 to 3.) b. Could the merger be profitable i. if fixed costs fell? If so, how much reduction is necessary? ii. If the variable costs of the merged firm fell by 75%, so that C3|4 = 8000 + 15q? (Fixed cost remains 8000 because we are assuming only variable costs fall.) c. Calculate the consumer surplus created in this market when there are four identical firms. How does it change after a merger occurs between F3 and F4 if: i. no costs savings occur ii. the merged firm reduces its fixed costs by $6000 iii. the merged firm…Suppose three Cournot competitors, each with costs Ci = 30qi, face an inverse market demand curve of P = 480 – 4Q. Suppose merging will not change costs. a. Find profits for the three firms. Note: Don’t round your answers. How will the profits change for F1 and for F2|3 if F2 and F3 merge? b. Suppose that after the merger occurs, F1 and the new firm F2|3 successfully collude at setting the monopoly price and output, and splitting the resulting monopoly profits. How, if at all, does this change the impact of the merger on F1 and on the merged firm?Part b please Suppose four Cournot competitors face an inverse market demand curve of P = 1620 – 8Q, each with identical costs Ci = 4000 + 60qi. Use the formulae given in exercise 8.15 (pgs. 214-15) for firm profits, market price, and consumer surplus at a Cournot equilibrium to answer the following questions. a. Demonstrate that a merger between F3 and F4 will not be profitable if their costs remain unchanged. (Careful: the “n” in the profit formula changes from 4 to 3.) b. Could the merger be profitable i. if fixed costs fell? If so, how much reduction is necessary? ii. If the variable costs of the merged firm fell by 75%, so that C3|4 = 8000 + 15q? (Fixed cost remains 8000 because we are assuming only variable costs fall.) c. Calculate the consumer surplus created in this market when there are four identical firms. How does it change after a merger occurs between F3 and F4 if: i. no costs savings occur ii. the merged firm reduces its fixed costs by $6000 iii. the merged firm…
- Consider any market that has a demand curve given by: Qd = 240 - 2P. Where Qd is the total quantity demanded in the market, given in millions of units and P is the market price, calculated in monetary units. Imagine that there are 2 Cournot oligopolists operating in this market with Cmg = CVme = 15 and fixed monthly costs equal to 1,400. About this market, ask yourself: a) What is the profit of each of the oligopolists? b) Imagine that one of the companies managed to implement a process innovation capable of halving its Cmg and CVme, so that they would go from 15 to 7.5. This investment implies an additional monthly expense of $1,800. Discuss the statement: "If this situation occurs, the innovative company will not implement variable cost reduction, as the quantity supplied in the market will increase very little; prices will remain very close to what they are today and its profits will not increase"All question are with regards to the following set up. There are two firms A and B. Firmscompete in a Cournot Duopoly in Karhide. They set quantities qA and qB. Inverse demand isP(qA + qB) = 18 − qA − qB and costs are C(q) = 3 ∗ q for both firms. Firm B is a domestic firm(in Karhide,) and firm A is a foreign firm (from Orgoreyn.) The government of Karhide engagesin a strategic trade intervention by giving firm B a per unit subsidy of s. (That is, when firm Bproduces and sells qB units, firm B receives a payment of s ∗ qB from the government.)You must show your work at each step, unless the questions is followed by ”No work required.” We now consider the government’s choice of s ≥ 0. We can see from above thatprofits and outputs depend upon s. With that in mind, let πB(s) and qB(s) denote firm B’s profitand output as a function of the subsidy s. Let qA(s) denote firm A’s equilibrium output as afunction of s. Let G(s) = πB(s) − s ∗ qB(s) denote the government’s objective function (d)…#4. If network externalities exist in an industry, the ________ firm to enter the market is often the one that succeeds in dominating the industry. a. first b. second c. third d. fourth e. fifth
- Consider trade relations between the United States and Mexico. Assume that the leaders of the two countries believe the payoffs to alternative trade policies are shown in the image attached. a) What is the dominant strategy for the United States? For Mexico? Explain. b) Define Nash equilibrium. What is the Nash equilibrium for trade policy? c) In 1993, the U.S. Congress ratified the North American Free Trade Agreement, in which the United States and Mexico agreed to reduce trade barriers simultaneously. Do the perceived payoffs shown here justify this approach to trade policy? Explain.Question 1.Assume there are only two art auction companies who account for 100% of all the sales of 19thCentury impressionist master work paintings in the world. Assume that each company buys thiskind of painting and then resells the paintings at monthly auctions. Ignoring the question of anylaws that might apply, describe what economic arrangement would maximize the twocompanies’ total profits? Show with supply and demand curves what profit they would makefrom this arrangement and what societal welfare loss, if any, results from it.1. Tying as a Bundling Strategy Ginnie's Gym Refreshment Bar Hydration Power Drink Satisfying Smoothie Early 7.00 5.00 Late 6.00 10.00 Ginnie has observed that her signature item, the Satisfying Smoothie, is very popular with the late evening crowd at the gym, but it is not so popular with the early crowd. The early and late crowds have only slightly different preferences for her Hydration Power Drink. The gym has a very large clientele, and Ginnie can’t always tell who has the late-crowd preference and who has the early-crowd preference. In her graduate MBA class, they have been studying tying as a bundling strategy. Ginnie asked her professor, “Would bundling work for my business?” Her professor said, “I think you told me that the marginal costs for you two products differ significantly, so first, I would recommend that you look at the contribution margin for each. Sometimes, low prices may be more profitable and sometimes high prices…
