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Two firms compete in Cournot Duopoly with demand curve Q = 14 - P. Each firm has average costs AC = $2. A third firm,
Two firms compete in Cournot Duopoly with demand curve Q = 14 - P. Each firm has average costs AC = $2. A third firm, also with AC = $2 has stated that it will begin production next year. The resulting market structure would be Cournot Triopoly. Would it be a profit maximizing strategy for the two incumbent firms to bribe the potential entrant in order to keep him out of the market? If so, how large a bribe should be paid
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