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1. A Cournot model describes the competition among three firms with equal marginal costs and no fixed costs. Inverse d e mand curve: Q =
1. A Cournot model describes the competition among three firms with equal marginal costs and no fixed costs.
Inverse demand curve: Q = 100 P
Constant marginal cost: MC = $35
a. What is the price?
b. What is the total output produced by these firms?
c. Please calculate the Lerner index
d. What is the elasticity at the oligopoly price and output levels?
e. What is the product of the elasticity and the Lerner Index?
f. How does this product compare to H (sum of squared market shares)?
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Handbook Of European Financial Markets And Institutions
Authors: Xavier Freixas, Philipp Hartmann, Colin Mayer
1st Edition
0199229953, 978-0199229956
