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Consider two retailers that are engaged in quatity competition (cournot). They have the same marginal cost given by the wholesale price which is denoted pw.
Consider two retailers that are engaged in quatity competition (cournot). They have the same marginal cost given by the wholesale price which is denoted pw. Inverse demand is given by p = a q. Assume pw < a. 1. Derive the total retail quantity as a function of the wholesale price pw. Now consider an upstream monopolist that sets the wholesale price. The upstream monopolist has marginal costs equal to zero
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