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2.2 Industry structure Two taxi companies compete in the taxi industry: Gold Top Taxis and Dark Grey Cabs. Every morning the two taxi companies each

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2.2 Industry structure Two taxi companies compete in the taxi industry: Gold Top Taxis and Dark Grey Cabs. Every morning the two taxi companies each decide how many taxis to put on the road. These decisions effectively determine the total number of taxi trips that are supplied into the market on that day. Consumers have no apparent preference over taxi companies. Inverse demand in the market has been estimated to be, Q P=50 1400' where P represents the price of a taxi trip in dollars, and Q is the total number of taxi trips supplied into the market on a given day. The cost characteristics of the two taxi companies have been estimated using corporate accounts submitted to the Ministry of Transport. Gold Top Taxis faces a marginal cost of MCG = $12.50 per trip. Dark Grey Cabs marginal cost is MCD = $14.00 per trip. Both companies incur fixed costs of FCG = FCD = $140,000 per day (regardless of the number of trips supplied)

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