There are three oligopolists who compete on quantity. Firm 1 has cost function c(q1) = 100 + 10q1. Firm 2 has cost function c(q2) = 100 + 15q2. And firm 3 has cost function c(q3) = 100 + 20q3. These cost functions apply to each period. Demand is Q=100-p.

a. In the first period, all firms compete. Find the equilibrium price and consumer surplus, as well as the profit of each firm, and the total surplus.

b. In the second period, firm 1 has bought out Firm 3. It ceases production in Firm 3's plant, so there are no longer any fixed costs associated with Firm 3. Find the equilibrium price and consumer surplus, as well as the profit of each firm, and the total surplus.

c. Should this merger be allowed?