Hello dear tutor, please solve the all parts of the question as very clear and detailed. THANK YOU SO MUCH!!! 4. There are two different market under the Galata Bridge. One of them is fried fishsandwich and the other is pickle. Consider two Cournot competitors selling goodswith demand curves given by:PF = 100 - qF + 0.5qpPp = 100 - qp + 0.5qFHere F and P indices refer fish and pickle markets respectively. For the sake ofsimplicity, assume that there is only one seller in each market.Suppose each firm has a marginal and average cost of $10.a. Using demand equations what can you say these two goods? Are theycomplement, substitutes or irrelevant? How do they differ from the standardCournot model?b. Find the equilibrium prices and quantities.c. Suppose the two firms merge. By doing so, the newly merged firm will act tomaximize the joint profits Find the joint-profit maximizing price andquantities.d. Are the combined profits greater or smaller from merging? That is, is mergingprofitable for the firms?Are consumers better or worse off with the firms merging? How does thiscompare to the mergers of Cournot competitors selling substitutes? What doesthis imply about antitrust policy towards mergers of firms sellingcomplementary goods (such as airplanes and engines, computers andprocessors, cars and tire companies, etc).е.

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Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter15: Oligopoly And Strategic Behavior

Section: Chapter Questions

Problem 7P

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Hello dear tutor, please solve the all parts of the question as very clear and detailed. THANK YOU SO MUCH!!!

4. There are two different market under the Galata Bridge. One of them is fried fish
sandwich and the other is pickle. Consider two Cournot competitors selling goods
with demand curves given by:
PF = 100 - qF + 0.5qp
Pp = 100 - qp + 0.5qF
Here F and P indices refer fish and pickle markets respectively. For the sake of
simplicity, assume that there is only one seller in each market.
Suppose each firm has a marginal and average cost of $10.
a. Using demand equations what can you say these two goods? Are they
complement, substitutes or irrelevant? How do they differ from the standard
Cournot model?
b. Find the equilibrium prices and quantities.
c. Suppose the two firms merge. By doing so, the newly merged firm will act to
maximize the joint profits Find the joint-profit maximizing price and
quantities.
d. Are the combined profits greater or smaller from merging? That is, is merging
profitable for the firms?
Are consumers better or worse off with the firms merging? How does this
compare to the mergers of Cournot competitors selling substitutes? What does
this imply about antitrust policy towards mergers of firms selling
complementary goods (such as airplanes and engines, computers and
processors, cars and tire companies, etc).
е.

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What does your answer in part e imply about antitrust policy towards mergers of firms selling complementary goods (such as airplanes and engines, computers and processors, cars and tire companies, etc.)?

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