Suppose that the market demand for a certain product is given by P = 370 – 2Q, where Q is total industry output. There are only two firms F1, F2 that manufacture that product. The two firms have the following marginal costs: c1 = 24 and cg - 26. a) Determine the output levels that will be produced in a Cournot-Nash equilibrium 92 = the price level in such an equilibrium P= and the profit levels b) Determine the output levels that will be produced in a Stackelberg-Nash equilibrium (consider Fj is the leader and F2 is the follower) the price level in such an equilibrium ps- and the profit levels

Suppose that the market demand for a certain product is given by P = 370 – 2Q, where Q is total industry output. There are only two firms F1, F2 that manufacture that product. The two firms have the following marginal costs: c1 = 24 and cg - 26. a) Determine the output levels that will be produced in a Cournot-Nash equilibrium 92 = the price level in such an equilibrium P= and the profit levels b) Determine the output levels that will be produced in a Stackelberg-Nash equilibrium (consider Fj is the leader and F2 is the follower) the price level in such an equilibrium ps- and the profit levels

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.4P

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uppose that the market demand for a certain product is given by P=370−2QP=370−2Q, where QQ is total industry output. There are only two firms F1,F2 that manufacture that product. The two firms have the following marginal costs: c1=24 and c2=26 a) Determine the output levels that will be produced in a Cournot-Nash equilibrium q1= q2= the price level in such an equilibrium P= and the profit levels u1= u2= b) Determine the output levels that will be produced in a Stackelberg-Nash equilibrium (consider F1F1 is the leader and F2F2 is the follower) q1S= q2S= the price level in such an equilibrium PS= and the profit levels uS1= uS2=
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Two firms who make identical products engage in Cournot competition. The inverse market demand curve is: P(Q) = 60 - 10Q, where Q=9₁ +92. The cost functions are C₁(9₁) 1091 and C₂ (92) : 592 for firms 1 and 2, respectively. Find the Nash equilibrium quantities for each firm. (a) 9₁ = = 1.5, 92 2 (b) q₁ = 92 = 2 (c) q₁ = 92 = 1.5 (d) 9₁ = 1.5, 92 = 3 (e) None of the above options is correct.
Two identical firms are engaged in Cournot competition, with cost functionsTCA(QA) = 10 QA and TCB(QB) = 10 QB. The market demand is given by P = 610 –2Q.a) Plot the best response functions and report the Cournot-Nash equilibrium quantities, price and profits.b) What are the prices, quantities, and profits for the firms if they decide to collude and share profits equally? c) Show that firms have an incentive the deviate from the collusive outcome.d) Find the Stackelberg equilibrium if A leads and B follows.e) Show the equilibria in the previous parts on the inverse demand function. Calculate and identify consumer surplus and deadweight loss in each equilibrium..