1) Consider a Duopoly, where the cost funtion of two identical firms (1 and 2) is TC(q) = 20q, (i= 1.2). The aggregate d

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1 Consider A Duopoly Where The Cost Funtion Of Two Identical Firms 1 And 2 Is Tc Q 20q I 1 2 The Aggregate D 1 (32.19 KiB) Viewed 15 times

1) Consider a Duopoly, where the cost funtion of two identical firms (1 and 2) is TC(q) = 20q, (i= 1.2). The aggregate demand function is Qd=240-2p (with Q=q₁ +9₂). Suppose first that the firms compete in quantities and find: the reaction functions; the Cournot equilibrium (output of the two firms, aggregate output and price); ● Report the reaction functions in a graph. . ● Suppose now that firm I plays the role of the leader while firm 2 acts as the follower. Find: the Stackelberg equilibrium (output of the two firms, aggregate output and price) report the Stackelberg equilibrium in the graph compare the two equilibria. What can we say about efficiency? ●