In a market with a Duopoly, if Market Demand is P=300-Q find the Cournot reaction curves and the Cournot Quantity solutions then deduce the Price in the case where Marginal Costs curves for either of the Duopoly firms is MC1=q1+30 and MC2=q2+30. Compare your results to the case where a Monopolist that has a MC=Q+30 replaces the Duopoly. What are the Monopoly Quantity and Price? Which quantities are bigger, Cournot or Monopoly? What is the Consumer Surplus in both cases? Set-up the Oligopoly model in a game theoretical prisoner’s dilemma framework. Explain briefly the strategies and how you reach the Nash Equilibrium.
In a market with a Duopoly, if Market Demand is P=300-Q find the Cournot reaction curves and the Cournot Quantity solutions then deduce the Price in the case where Marginal Costs curves for either of the Duopoly firms is MC1=q1+30 and MC2=q2+30. Compare your results to the case where a Monopolist that has a MC=Q+30 replaces the Duopoly. What are the Monopoly Quantity and Price? Which quantities are bigger, Cournot or Monopoly? What is the Consumer Surplus in both cases? Set-up the Oligopoly model in a game theoretical prisoner’s dilemma framework. Explain briefly the strategies and how you reach the Nash Equilibrium.
Chapter15: Imperfect Competition
Section: Chapter Questions
Problem 15.2P
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In a market with a Duopoly, if Market Demand is P=300-Q find the Cournot reaction
curves and the Cournot Quantity solutions then deduce the Price in the case where
Marginal Costs curves for either of the Duopoly firms is MC1=q1+30 and MC2=q2+30.
Compare your results to the case where a Monopolist that has a MC=Q+30 replaces the
Duopoly. What are the Monopoly Quantity and Price? Which quantities are bigger,
Cournot or Monopoly? What is the Consumer Surplus in both cases? Set-up the
Oligopoly model in a game theoretical prisoner’s dilemma framework. Explain briefly
the strategies and how you reach the Nash Equilibrium.
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