Suppose UA (U) and AA (A) in an oligopoly market. They have same marginal cost 12. Inverse market demand is given, p = 60 2Q (1) Find best response BRU (qA) and BRA(qb) (2) Given (1), solve optimal qU and qA, and profits for each firm (3) Suppose these UA and AA will collude to act like monopoly. How much each firm will produce? and profits? (4) Suppose there is no binding contract between these two firms, so UA decides to cheat. As a result, how much each firm will produce? and profits?

(5) Suppose AA buy some new airplanes which have higher fuel efficiency, so mar- ginal cost decrease to 10, and market become oligopoly again. solve optimal qnew U and qnew A , and profits for each firm. Compare to (2), what do you find?

Question 3: Suppose UA (U) and AA (A) in an oligopoly market. They have same marginal cost 12 . Inverse market demand is given, p=602Q (1) Find best response BRU(qA) and BRA(qb) (2) Given (1), solve optimal qU and qA, and profits for each firm (3) Suppose these UA and AA will collude to act like monopoly. How much each firm will produce? and profits? (4) Suppose there is no binding contract between these two firms, so UA decides to cheat. As a result, how much each firm will produce? and profits? 2 (5) Suppose AA buy some new airplanes which have higher fuel efficiency, so marginal cost decrease to 10 , and market become oligopoly again. solve optimal qUnew* and qAnew*, and profits for each firm. Compare to (2), what do you find? Question 3: Suppose UA (U) and AA (A) in an oligopoly market. They have same marginal cost 12 . Inverse market demand is given, p=602Q (1) Find best response BRU(qA) and BRA(qb) (2) Given (1), solve optimal qU and qA, and profits for each firm (3) Suppose these UA and AA will collude to act like monopoly. How much each firm will produce? and profits? (4) Suppose there is no binding contract between these two firms, so UA decides to cheat. As a result, how much each firm will produce? and profits? 2 (5) Suppose AA buy some new airplanes which have higher fuel efficiency, so marginal cost decrease to 10 , and market become oligopoly again. solve optimal qUnew* and qAnew*, and profits for each firm. Compare to (2), what do you find