1) Calculate the equilibrium of linear asymmetric Cournot duopoly. That is, assume that P = a - (q1 + q2), that there is no fixed cost, but the marginal cost of each firm differs, i.e., Firm 1 (Eau) has a cosntant marginal cost of c1, and Firm 2 (Neu) has a constant marginal cost of c2 with c1 < c2. Calculate the consumers' suprlus, each firm's profit as well the as total profit, and the deadweight loss due to oligolpoly. 2) How does the existence of fixed cost change the best-response (reaction) functions in a symmetric Cournot duopoly?

1) Calculate the equilibrium of linear asymmetric Cournot duopoly. That is, assume that P = a - (q1 + q2), that there is no fixed cost, but the marginal cost of each firm differs, i.e., Firm 1 (Eau) has a cosntant marginal cost of c1, and Firm 2 (Neu) has a constant marginal cost of c2 with c1 < c2. Calculate the consumers' suprlus, each firm's profit as well the as total profit, and the deadweight loss due to oligolpoly. 2) How does the existence of fixed cost change the best-response (reaction) functions in a symmetric Cournot duopoly?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.4P

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