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a Consider a homogeneous duopoly with inverse demand P=240-2Q where P is price in the market and Q is total output of bo
Posted: Mon Apr 25, 2022 8:17 am
by answerhappygod
- A Consider A Homogeneous Duopoly With Inverse Demand P 240 2q Where P Is Price In The Market And Q Is Total Output Of Bo 1 (109 KiB) Viewed 19 times
a Consider a homogeneous duopoly with inverse demand P=240-2Q where P is price in the market and Q is total output of both firms. The cost functions are as follows: ) = + 119,50 0 C1(91) if qı (49ı + 450 if 91 and C2(92) = {> 0 if q2 = 0 (892 +450 if 92 > 0) (a) Find the Cournot Nash equilibrium and the price prevailing in the market. [6 marks] (b)Suppose now Firm 1 moves first and commits to an output level. Firm 2 observes Firm's 1 commitment and chooses its own output level (that is the Stackelberg leader). Find the output of the leader and the follower. [6 marks] (c)Compare and contrast profit level of each firm under Cournot and Stackelberg. Explain your answer with relevant calculations. [6 marks]