Jack and Mike harvest timber and sell it to local sawmills. Harvesting timber requires a special government permit. Jack and Mike have the only two permits and are therefore the only two producers of timber in this market. Harvested timber is a homogenous product. 4 Total market demand for timber is given by = 200,000 5, where denotes total quantity measured in tons. Jack and Mike both have a constant marginal cost of $200 per ton. Fixed costs are zero.

Question: Calculate the Cournot equilibrium outputs (i.e. assuming that Jack and Mike make simultaneous output decisions). What is the market price?