The fact that the firms in an oligopoly are mutually interdependent means that each firm: must consider the reactions of its competitors when it sets the price for its output. produces a product that is similar, but not identical, to the products of its competitors. produces a product that is identical to the products of its competitors. faces a perfectly elastic demand curve for
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- What is the homogeneous-good duopoly Cournot equilibrium if the market demand function is Q= 1,800 - 1,000p. and each firm's marginal cost is $0.28 per unit? The Cournot-Nash equilibrium occurs where q, equals and 92 equals (Enter numenic responses using real numbers rounded to two decimai places.) Furthermore, the equilibrium occurs at a price of $ (Round your answer to the nearest penny.)Suppose that the market demand for facial mud packs are given as follows: P = 2.200 - Q. Mud packs can be produced at no cost. Determine the level of output that would be produced by each firm in a cournot duopoly in the long run. Calculate th price charged for mud packs. Show all calculations.Bonus question Competition à la Cournot with homogenous goods and asymmetric incomplete information. Consider a duopoly that competes à la Cournot (choosing quantities simultane- ously), facing inverse demand function p(Q) = a – Q where Q = q1 + 92, where the cost function for firm 1 is c1 (91) = cqı with c > 0 which is common knowledge for both firms. The cost function for firm 2 is not common knowledge and can be c2(42) = Cí42 with probability 0 € (0, 1) or c2(92) = CL92 with probability 1- 0, where CL < CH- The notation Cz means low cost and CH means high cost. Firm 2 can be a new entrant to the industry, or could have just invented a new technology. Firm 2 knows its marginal cost which means it has private information since it know if it is Cz or CH. Firm 1 on the other hand does not know the marginal cost of firm 2 (we don't either) and therefore it has less information than firm 2 and therefore constitutes asymmetric information. Firm 2 may want to choose a different (presumably…
- The demand the duopoly firms face is p = 100 – 2Q where Q = q1 + q2. Each firm has the following cost function: c(qi) = 40 + qi2/2, i = 1, 2. Using calculus, determine the Stackelberg equilibrium. determine the Cournot equilibrium. plz answer correct calculation asap plz Dont answer by pen pepar plzSuppose that identical duopoly firms have constant marginal costs of $0 per unit. Firm 1 faces ademand function of q1 = 100 – 2p1 + p2, where q1 is Firm 1’s output, p1 is Firm 1’s price, and p2 isFirm 2’s price. Similarly, the demand Firm 2 faces is q2 = 100 – 2p2 + p1. Please solve for theBertrand equilibrium.Two Cournot competitors face inverse demand p = 50-Q, where Q = 9₁ +92 is the total output of firms 1 and 2. Both firms have marginal cost of 2. What are the equilibrium output levels q₁ and 92? 16 and 16 25 and 25 20 and 9 36 and 3
- Consider a duopoly with a demand curve given by P = a –bQ, where a and b are positive constants and Q is the total production by the two firms. Firms sell identical goods and have an identical constant marginal cost of production c. Fixed costs are equal to zero. We assume firms choose quantities simultaneously (Cournot competition). a. Obtain the first order condition of profit maximization for each firm. Use graphical analysis and economic intuition to explain what they represent. [30%] b. Obtain the profit maximizing quantity for each firm. Explain what they represent using game theory concepts. [20%] c. Demonstrate using relevant graphical analysis and economic intuition that the results obtained in b are not a Pareto Optimum for the firms involved. [20%] d. How would the graphical analysis in part a change if Firm A had a fixed cost of production?If each firm acts to maximize its profits, taking its rival’s output as given (i.e., the firmsbehave as Cournot oligopolists), what will be the equilibrium quantities selected by each firm?What is the total output, and what is the market price? What are the profits for each firm?Consider a homogenous product duopoly in which the two firms, 1 and 2, compete by choosing their respective quantities, Q1 and Q2. Market demand is given by Q=20−P, where P is the market price and Q= Q1+Q2. Firm 2’s total costs are given by TC2 = 2Q2 , while firm 1’s total costs areTC1= Q1^2 . (a) calculate To which firm would the ability to move first be most valuable? Explain fully. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- Oligopoly: Quantity Competition 1. Consider two duopolists who each have a constant marginal cost c = c2 = 2 and face inverse demand P = 4 – Q,where Q = Q1 + Q2 is the total output of both firms. 1. Find the Cournot equilibrium quantity for each firm, the resulting market price, and the profits for each firm. 2. Find the Stackelberg equilibrium quantities for each firm, and the price, and the profits for each firm supposing that Firm 1 is the industry leader.Assume firms' marginal and average costs are constant and equal to c and that inverse market demand is given by P = a - bQ where a, b > 0. Suppose now the market is served by 2 firms that choose quantities for their identical products simultaneously. Calculate: i. ii. iii. iv. The Nash equilibrium prices for Cournot duopolists Firm output Market out Firm profitThere is a differentiated Cournot duopoly. The inverse demand curve for firm 1 is p subscript 1 equals 18 minus 3 q subscript 1 minus 2 q subscript 2 and the inverse demand for firm 2 is p subscript 2 equals 12 minus q subscript 1 minus 2 q subscript 2. There are no costs of production. The two firms' first-order conditions are a. 18 minus 6 q subscript 1 minus 2 q subscript 2 equals 0 and 12 minus q subscript 1 minus 4 q subscript 2 equals 0 b. 18 minus 3 q subscript 1 minus 2 q subscript 2 equals 0 and 12 minus q subscript 1 minus 2 q subscript 2 equals 0 c. 18 minus 6 q subscript 1 minus 4 q subscript 2 equals 0 and 12 minus 2 q subscript 1 minus 4 q subscript 2 equals 0 d. 18 minus 3 q subscript 1 minus 4 q subscript 2 equals 0 and 12 minus 2 q subscript 1 minus 2 q subscript 2 equals 0 A monopolistic firm sells into two markets. The two inverse demand curves are and . Assume that the firm cannot charge different prices in the two markets. Then its total revenue will be a.…