1 Consider A Market With Four Identical Firms Each Of Which Makes An Identical Product The Demand Function Of This Pr 1 (23.94 KiB) Viewed 68 times
1 Consider A Market With Four Identical Firms Each Of Which Makes An Identical Product The Demand Function Of This Pr 2 (23.94 KiB) Viewed 68 times
1. Consider a market with four identical firms, each of which makes an identical product. The demand function of this product is P = 120 - where P is the price and Q is the aggregate output, Q = 91 +92 +93 +94. The production costs for firms 1, 2, and 3 are identical and given by C(q) = 20q, for i E (1,2,3,4) where q, is the output of firm i. Assume that each firm chooses her output level to maximize profits given that they act as Cournot competitors. Suppose Firm 3 and Firm 4 merge. Show that the merger paradox exist.
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