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Suppose there are two firms that are currently producing bottled water with firm A in the Township of Langley and Firm B in Abbotsford. Both
Suppose there are two firms that are currently producing bottled water with firm A in the Township of Langley and Firm B in Abbotsford. Both firms are currently using the Metro Vancouver Regional District water supply to bottle the water. Suppose that demand for large storage bottles of water is: P=120-0.5Q whereQ=qa+qb . Suppose that the cost of accessing the water for either firm is C(qi)=25+qi. (a) What is the best response function for firm A and for firm B? (b) What is the Nash Cournot Equilibrium here? What are the profits? (c) Suppose the Metro Vancouver Regional District changes the rules for water with the cost doubling for firms outside the region. This is double firm B's cost, how does this change the Nash Cournot equilibrium
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