2. [26] It is the year 2025 and following a collapse in sales following the re-opening of Canadian society, there are tw

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2 26 It Is The Year 2025 And Following A Collapse In Sales Following The Re Opening Of Canadian Society There Are Tw 1 (22.61 KiB) Viewed 34 times

2. [26] It is the year 2025 and following a collapse in sales following the re-opening of Canadian society, there are two surviving food delivery services operating in Canada: delayCart and DoorDawdle. They face the following market demand Q = 420 - 3p, and they both have the cost function ; (9;) = 9;?, where j = {delayCart, DoorDawdle} denotes the firm. The total number of meals delivered is equal to the output of the two firms. a. [6] Suppose the two firms compete on quantities. Find the Cournot-Nash equilibrium price and output of each firm. How much profit does each firm earn? b. [8] Suppose that the two firms decide to form a cartel. What will the firms' profits be under a collusive arrangement? Are their profits different than in part(a)? Explain the intuition behind your finding. C. [4] Is the cartel is a stable arrangement in a one period interaction? Show supporting calculations.