Suppose a duopoly where two firms compete in quantity. Firms have the same costs. Firm A acts as a Stackelberg leader whereas firm B acts as a follower. Suppose thatanother firm, C, identical to the first two enters the market and playsa follower. Profits for firms A and B:O (a) both are unaffected by the entry of firm CO (b) both decrease as a consequence of the entry of firm CO (c) the profits of firm A decrease and those of firm B are unaffectedO (d) None of the above

Stacleberg model is the duopoly model in which two firms for the same product works. Here both the…

Answered: Suppose a duopoly where two firms…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider a duopoly market with 2 firms. Aggregate demand in this market is given by Q = 500 – P, where P is the price on the market. Q is total market output, i.e., Q = QA + QB, where QA is the output by Firm A and QB is the output by Firm B. For both firms, marginal cost is given by MCi = 20, i=A,B. Assume the firms compete a la Cournot. What are the equilibrium quantities? What is the total quantity supplied on this market? What is the equilibrium price in this market?
Select the correct statements. Note: Multiple correct, multiple selections. Topics covered: Stackelberg, Cournot, and Bertrand models. O A. Suppose the inverse market demand function is P (y) = a - by, and the marginal cost of each firm is K (same and constant). In this market, the market price will be higher if the market is a Stackelberg duopoly than the market price if it is a Cournot duopoly market. В. A Stackelberg leader will necessarily make at least as much profit as he would if he acted as a Cournot oligopolist. O C. Suppose, in a Stackelberg duopoly, the follower's output is measured on the horizontal axis. Profits to the follower will increase as we move to isoprofit lines that are further to the left. D. The equilibrium in Bertrand duopoly where both firms sell identical products is Pareto efficient. Е. In Cournot duopoly, if each firm has the same marginal MC = K, each firm produces the same level of output and earns the same profit.
The demand is homogenous product, Cournot duopoly is P=100 -2(Q1+Q2) and the costs are C1=20Q1 and C2=15Q2 1. Determine the reaction function of each firm II. Calculate each firm's equilibrium output. II. Calculate market price. note : do it word form inverse market
40 36 32 28 24 20 16 12 8 47 0 P 4 Firm in oligopoly market MC 2 MR MC 1 D 8 12 16 20 24 28 32 40. Assuming MC2 to be the true marginal cost curve for this oligopoly firm, what price will this firm charge? (a) $8 Ⓒ (b) $12 (c) $15 (d) $20 Q
All question are with regards to the following set up. There are two firms A and B. Firmscompete in a Cournot Duopoly in Karhide. They set quantities qA and qB. Inverse demand isP(qA + qB) = 18 − qA − qB and costs are C(q) = 3 ∗ q for both firms. Firm B is a domestic firm(in Karhide,) and firm A is a foreign firm (from Orgoreyn.) The government of Karhide engagesin a strategic trade intervention by giving firm B a per unit subsidy of s. (That is, when firm Bproduces and sells qB units, firm B receives a payment of s ∗ qB from the government.)You must show your work at each step, unless the questions is followed by ”No work required.” We now consider the government’s choice of s ≥ 0. We can see from above thatprofits and outputs depend upon s. With that in mind, let πB(s) and qB(s) denote firm B’s profitand output as a function of the subsidy s. Let qA(s) denote firm A’s equilibrium output as afunction of s. Let G(s) = πB(s) − s ∗ qB(s) denote the government’s objective function (d)…
Please help me understand part d to part h
Suppose two firms face market demand of P=150-Q, where Q = q1+ q2. Both firms have the same unit cost of C, which C=28. Assume the firms compete a la Stackelberg. Firm 1 is the leader and Firm 2 is the follower in this market. a) What is the follower's total revenue function? b) Determine the equilibrium output level for both the leader and the follower. c) Determine the equilibrium market price. d) Determine the profits of the leader and the follower.
1. which compete in quantities (Cournot -Nash equilibrium = C) 2. which compete in quantities with the first firm (the Leader) choosing the output first (Stackelberg competition = S). 3. which collude and choose quantities in order to maximize the joint profits (behave like two plants of a multiplant monopoly = M).
Consider a homogeneous good duopoly with linear demand P(q) = 12- q,where q is the total industry output, and constant marginal costs c = 3. 1. Suppose that firms simultaneously set quantities. Determine the equilibrium (price, quantities, profit, welfare). 2. The firms consider to merge although their production costs are not affected. Determine the optimal price and quantity after merger. 3. Is such a merger profitable? 4. What are the welfare effects of such a merger?
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Consider a duopoly market with 2 firms. Aggregate demand in this market is given byt Q = 500 – P, where P is the price on the market. Q is total market output, i.e., Q = QA + QB, where QA is the output by Firm A and QB is the output by Firm B. For both firms, marginal cost is given by MC = 20, i=A,B. « Assume the firms compete a la Cournot. e a) Find the inverse demand in this market. Note that marginal revenue for both firms is given by MRA=500-2QA-QB, MRB=500-QA-2QB. b) Describe what a best-response curve is and how to find it. c) Derive the best-response function for each firm. d) What are the equilibrium quantities? e) What is the total quantity supplied on this market? f) What is the equilibrium price in this market?
Somehow Im having trouble with parts a-c. Could I have help understanding and solving giving this is a Bertrand duopoly model.

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