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.Two firms, Alpha and Bravo Corp. produce radios and together face the inverse demand curve, P = 200 - Q. (Q=q a +q b )
.Two firms, Alpha and Bravo Corp. produce radios and together face the inverse demand curve,
P = 200 - Q. (Q=qa +qb)
Each firm has total costs, TC, of TC = 250 + 50qa or TC = 250 + 50qb
(a) If the two firms behave as Cournot oligopolists, derive the two firms' reaction functions and work out equilibrium outputs, price and profits.
(b) How much extra profit could each firm gain by colluding and forming a perfect cartel?
(c) What would the industry/firm output, price and firm profits be if Alpha Corp. were a cooperative?
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