= Suppose two identical companies produce wood stoves and they are the only ones on the market. Its costs are given by:

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Suppose Two Identical Companies Produce Wood Stoves And They Are The Only Ones On The Market Its Costs Are Given By 1 (124.89 KiB) Viewed 74 times

= Suppose two identical companies produce wood stoves and they are the only ones on the market. Its costs are given by: C1 (92=20091 and C2 (92) = 20092. And the inverse market demand curve is: P=2000-2Q, where Q =91 +92 a) Get the Cournot-Nash equilibrium. Calculate the profits of each company. Show graphically. b) Suppose that the two companies form a cartel to maximize joint profits. How many stoves will you produce? Calculate the profits of each company. Represent graphically. c) Managers now note that explicit agreements to collude are illegal. Each company must decide on its own whether to produce the amount of Cournot or that of the cartel. Payoffs matrix 2 (Payoff 1, Payoff 2) Cournot Cartel Cournot 1 Cartel