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Consider the Cournot duopoly model where inverse demand is P(Q) = 50 2Q and firms have the same cost functions: c1 = c2 = 10
Consider the Cournot duopoly model where inverse demand is P(Q) = 50 2Q and firms have the same cost functions: c1 = c2 = 10 + 2qi . (i) What is the Nash equilibrium payoffs, ie. profits per each firm? (ii) How much is Firm 1 willing to pay Firm 2 to be the first mover? (iii) What is the Cartel eq. profit per firm? (iv) If the game is repeated what is the to have Cournot Nash eq. as sustainable subgame perfect eq?
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