3. Suppose there is a duopoly of two identical firms, A and B, facing the inverse demand P = 310-Q, and cost functions are CA = 10QA and CB = 10QB respectively. a) Find the Cournot - Nash equilibrium quantities, price, and profits for each firm. b) Suppose that A acts as the leader in a Stackelberg model and B responds. What are the respective prices, quantities, and profits of each firm now? c) What are the prices, quantities, and profits for the firms if they decide to collude and share profits equally? d) Show that
3. Suppose there is a duopoly of two identical firms, A and B, facing the inverse demand P = 310-Q, and cost functions are CA = 10QA and CB = 10QB respectively. a) Find the Cournot - Nash equilibrium quantities, price, and profits for each firm. b) Suppose that A acts as the leader in a Stackelberg model and B responds. What are the respective prices, quantities, and profits of each firm now? c) What are the prices, quantities, and profits for the firms if they decide to collude and share profits equally? d) Show that
Chapter9: Monopolistic Competition And Oligoply
Section: Chapter Questions
Problem 11SQP
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