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2 . The daily inverse demand curve for taxi journeys from Maynooth to Liffey Valley shopping centre is P ( Q ) = 4 0

2. The daily inverse demand curve for taxi journeys from Maynooth to Liffey Valley shopping centre is
P(Q)=403Q, where P is the price per journey, in , and Q is the number of daily journeys. Assume that
only two taxi companies currently operate in this taxi market. Each taxi journey costs 4 to provide.
Suppose that the two taxi companies collude and agree to each provide half of the daily journeys that a
monopoly taxi company would. Is this a Nash equilibrium outcome, i.e. is such a collusive/cartel agreement
stable, and, if not, what is the Nash equilibrium outcome in terms of daily journeys?

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