An industry has three firms each of which produces output at a constant unit cost of $10 per unit. The demand function f

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An Industry Has Three Firms Each Of Which Produces Output At A Constant Unit Cost Of 10 Per Unit The Demand Function F 1 (137.22 KiB) Viewed 14 times

An industry has three firms each of which produces output at a constant unit cost of $10 per unit. The demand function for the industry is q = 100-p. Firms compete in price in a Bertrand game a) Calculate the minimum & that can sustain collusion if firms use a trigger strategy. b) Suppose that two firms merge, calculate the minimum & that can sustain collusion after the merger. c) After the merger, the remaining two firms reach a cross share holding agreement. Each of the two firms owns a share a of its rival. The share is small enough for each firm to keep full control of its activities and decision. The rival is minority shareholder and just receives a share a of the firm's profits. What is the minimum > that can sustain collusion if firms use a trigger strategy? Is the likelihood of collusion affected by this cross share holding agreement?