Exercise 3: Merger under Cournot Assume an industry with three firms, which produce a homogeneous product for zero costs. Let qi denote the output level of firm i, with i = 1,2,3 and let Q denote the aggregate industry-production level. Assume the demand curve for the industry to be p = 100 Q. a) Find the Cournot equilibrium output and profit level of each firm! b) Now suppose that firms 2 and 3 merge into a single firm that we call firm 4. Calculate the profit level of firm 4 under a Cournot market structure! c) Do firms 2 and 3 benefit from this merger? d) Now suppose that firm 1 merges with firm 4. Does firm 4 benefit from the merger with firm 1? e) Explain why the first and second mergers yield different results regarding the profitability of mergers! Hi, Can anyone solve this question in a easier way? Exercise 3: Merger under Cournot Assume an industry with three firms, which produce a homogeneous product for zero costs. Let qi denote the output level of firm i, with i = 1,2,3 and let Q denote the aggregate industry-production level. Assume the demand curve for the industry to be p = 100 Q. a) Find the Cournot equilibrium output and profit level of each firm! b) Now suppose that firms 2 and 3 merge into a single firm that we call firm 4. Calculate the profit level of firm 4 under a Cournot market structure! c) Do firms 2 and 3 benefit from this merger? d) Now suppose that firm 1 merges with firm 4. Does firm 4 benefit from the merger with firm 1? e) Explain why the first and second mergers yield different results regarding the profitability of mergers! Hi, Can anyone solve this question in a easier way