Consider three firms with a same cost function c(x)=x^2. The market demand function is given x=10-px.

• Suppose that they are in an oligopolistic market structure. What is the Cournot Nash equilibrium? Calculate the profit of each firm too.
• Suppose that these firms now behave as if they are merged into one monopolistic firm with c(x)=x^2. If they simply split the profit equally, how much would each firm earn?
• When these firms can choose either two questions, what would they choose? - check whether your answer is intuitive and explain why.