Question
Assume that duopolists in the market share a market demand curve given by the following linear demand function: P-120-Q1-Q2, where Q and Q are
Assume that duopolists in the market share a market demand curve given by the following linear demand function: P-120-Q1-Q2, where Q and Q are the quantities sold by the respective firms and P is the market price. Marginal cost functions for the two companies are: MC-7+1.5Q1 and MC2=9+Q2. a. Assuming that the firms act independently as in the Cournot model (quantity competition), compute the equilibrium output level for each firm and market price. Q1- F Q2- P=$ b. Assume that the firms collude to maximize the joint profits, compute the equilibrium output level for each firm and market price. Q1- Q2- P-$
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Microeconomics
Authors: Robert Pindyck, Daniel Rubinfeld
8th edition
978-0132870436, 132870436, 013285712X, 978-0133371178, 133371174, 978-0132857123
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