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2. [26] It is the year 2025 and following a collapse in sales following the re-opening of Canadian society, there are two surviving food delivery

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2. [26] It is the year 2025 and following a collapse in sales following the re-opening of Canadian society, there are two surviving food delivery services operating in Canada: delayCart and DoorDawdle. They face the following market demand Q = 420 3p, and they both have the cost function C;- (q;) = of, where j = {delayCart, DoorDawdle} denotes the firm. The total number of meals delivered is equal to the output of the two firms. a. [6] Suppose the two firms compete on quantities. Find the Cournot-Nash equilibrium price and output of each firm. How much profit does each rm earn? b. [8] Suppose that the two firms decide to form a cartel. What will the firms' prots be under a collusive arrangement? Are their profits different than in partla)? Explain the intuition behind your finding. c. [4] Is the cartel is a stable arrangement in a one period interaction? Show supporting calculations. d. [8] Suppose instead that DoorDawdle is the market leader, and that the firms continue to engage in quantity competition. i. [6] What are the prots of each firm? ii. [2] Are consumers better off under this market structure than under a simultaneous quantity setting duopoly? Explain your reasoning without calculating consumer surplus explicitly

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