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Firm 1 and rm 2 compete in a Cournot oligopoly in homogeneous goods' Firm 1 is a domestic rm, that the government would like to
Firm 1 and rm 2 compete in a Cournot oligopoly in homogeneous goods' Firm 1 is a domestic rm, that the government would like to favour. They can either give rm 1 a per unit subsidy or impose a per unit tax on rm 2. O a. We do not have enough information to compare consumer surplus under the two policies. b. Consumer surplus will be higher under the policy which gives rm 1 a per unit subsidy. O c. Consumer surplus will be higher under the policy which imposes a per unit tax on firm 2. 0 d. Consumer surplus will be the same under both policies
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