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Two social media platforms control the targeted advertisement business. The market demand for their ads is ( ) = 1 8 0 - 6 and
Two social media platforms control the targeted advertisement business. The market demand for their ads is ( ) = 1 8 0 - 6 and they each have the cost function ( ) = 4 where = { 1 , 2 } . a . [ 8 ] Initially, the two firms compete on quantity. Find the Cournot - Nash equilibrium price and output of each firm. How much profit does each firm earn? b . [ 8 ] Suppose that the two firms decide to form a cartel. What will the firms' profits be under a collusive arrangement ( assume that they split the joint profit evenly ) ? Why are their profits different than in part ( a )
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