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The market demand curve for mineral water is P=15-Q. Suppose that there are two firms that produce mineral water, each with a constant marginal
The market demand curve for mineral water is P=15-Q. Suppose that there are two firms that produce mineral water, each with a constant marginal cost of 3 dollars per unit. Fill in the entries for each of the following duopoly models. a) Cournot model (quantity competition). b) Stackelberg model (quantity leadership). Model Q1 Q2 Q P (Profit margin)1 (Profit margin)2 Cournot Stackelberg Write up your analysis, and compare your answers. The quantity produced by firm 1 is denoted by Q1 The quantity produced by firm 2 is denoted by Q2. The total quantity produced in the market is denoted by Q. The market price is denoted by P. Profit margin is P-MC.
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