Y7

2. You begin to raise chickens for eggs, with your demand for eggs given by q1 = 30 p1 + p2 Where p1 is the price you charge for eggs and p2 is the price your competitor charges for eggs. Your competitor, meanwhile, faces demand given by q2 = 30 p2 + p1 for eggs. Legal requirements require you to set your prices simultaneously. As eggs are easy to produce, you face no marginal costs. a. What type of oligopoly is this? What is the equilibrium price and quantity for both you and your competitor? b. Assume you lobby to the mayor and get permission to set your price prior to your competitor. What prices will you and your competitor settle upon? How much will you both produce, and how much profit will you each earn? c. Compare the efficiency outcomes in a and b. Did lobbying to the mayor improve your outcome