21. (15 points) Two firms, Firm 1 and Firm 2, are currently engaged in Cournot competi- tion. Both firms sell widgets, a
Posted: Thu May 05, 2022 7:38 am
- 21 15 Points Two Firms Firm 1 And Firm 2 Are Currently Engaged In Cournot Competi Tion Both Firms Sell Widgets A 1 (25.15 KiB) Viewed 19 times
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(c) What is each firm's profit? (d) Now suppose that the firms collude, splitting total profits evenly. With collusion, how many widgets are produced and at what price? Hint: MR = 250-2Q. (e) What are each firm's collusive profits, assuming an even split?
(f) What are the standard antitrust damages? (g) The government has enough resources to detect collusion with probability p = 1. If firms are fined the damages you found in the previous part, is the detection probability high enough to deter collusion?