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Theinversemarketdemandforacertaingoodis: P =100 Q/2 where Q istheindustry output.Therearetwosymmetric firmsproducingthegood,eachwiththefollowingcostfunction: TC i =10 q i , where q i istheoutputofthe i thfirm( i =1 , 2).
Theinversemarketdemandforacertaingoodis:
P=100 Q/2
whereQistheindustry output.Therearetwosymmetric firmsproducingthegood,eachwiththefollowingcostfunction:
TCi=10qi,whereqiistheoutputoftheithfirm(i=1,2).
- Supposethatthefirmsarecompetinginquantities.Ifsomeoneproduces morethantheirshareofthecarteloutput,theotherfirmpunishesthembyrevertingtotheCournot output.Whatisthecritical valueofthediscountfactor?
- Nowassumethatthedetectionlag(thetimerequiredtodiscoverandrespondtocheating) istwoperiods.Whatisthecritical valueofthediscountfactor?
- Nowassumethatthefirmswiththeabovecostfunctions competeinprices(withoutcapacityconstraint).Ifsomeoneproduces morethantheirshareofthecartel output,theotherfirmpunishes thembyrevertingtotheBertrandequilibrium.Whatisthecriticalvalueofthediscountfactor?
- Inwhichoftheabovecasesiscartelformation mostlikely?
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An Inquiry Into The Nature And Causes Of The Wealth Of Nations
Authors: Adam Smith, R H Campbell
1st Edition
0865970068, 9780865970069
