1) Consider the following two finite versions of the Cournot duopoly model where inverse demandis given by P = a-Q (Q-q1 + q2 and a > Q> 0) and marginal cost is a constant c for each firm.First, suppose each firm must choose either half the monopoly quantity, qm/2 = (a – c)/4, or theCournot equilibrium quantity, qe = (a - c)3. No other quantity choices are feasible. Show that thistwo-action game is equivalent to the Prisoner's Dilemma: i) each firm has a strictly dominatedstrategy and ii) both firms are worse off in qquilibrium than they would be if theycooperated. (Hint: calculate each firm's payoff for possible outcome combinations)

Cournot contest is a financial model where contending firms pick an amount to deliver autonomously…

Answered: 1) Consider the following two finite…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider an industry with 4 firms with the same total cost function TC(q) = 20q. The demand function is p= 260 − 2Q. (a) Solve for Cournot equilibrium: how much each firm produces in equilibrium? What is an equilibrium price and profits? (b) What will be the profit of each firm if all the firms join the cartel? (c) If one of the firms wants to deviate from the cartel agreement, what output should it set? Calculate the profit of the cheating firm.
(i) They compete in quantities with each other (Cournot-Nash equilibrium) (ii) They collude as though they are all plants of the same single multi-plant monopoly. (iii) B and C act as two plants of a single multi-plant monopoly “B+C”, which competes in quantities (Cournot competition) against A.
Consider a Duopoly model, in which two firms decide a quantity sequentially. For the convenience, let's say Firm 1 is a dominant firm and Firm 2 is a follower. The market demand is given by P=110 - 5Q, where Q is the total output (i.e., Q=Q1+Q2). Each firm has an identical cost function, TCi=7Qi, i=1, 2. Each firm maximizes its profit by choosing the quantity. In this Stackelberg equilibrium, Firm 1 will sell __________ units.
Consider a standard Cournot oligopoly with n ≥ 2 identical firms, P(x) = a - bX, X ≥ 0, and C(x) = cx2. a. Find the Cournot equilibrium output and profit. b. If m firms wish to merge, what would be their cost function, assuming that they can use all their m production plants but that they otherwise do not have any eciency gains as a result of the merger? c. Given the cost function from part b, when is an m-firm merger profitable to the merged entity? To the non merging firms? d. Give a precise economic intuition explaining your answer relative to the usual (linear cost) case.
Consider two Cournot oligopolists, firm 1 and firm 2, in a homogenous product market. The market demand is P = 100 – 3Q and each firm has a constant marginal cost MC=10. The Cournot equilibrium quantity for each firm is: a. 7.5 b. 10 c. 5 d.15
Calculate every step please!!!
Assume firms' marginal and average costs are constant and equal to c and that inverse market demand is given by P = a - bQ where a, b > 0. Suppose now the market is served by 2 firms (one leader, and one follower) that choose quantities for their identical products. Calculate: i. ii. iii. iv. The Nash equilibrium quantities for the Stackelberg duopolists Market output Market price Firm profit
Consider two Cournot oligopolists, firm 1 and firm 2, in a homogenous product market. The market demand is P = 100 - 3Q and each firm has a constant marginal cost MC=10. The market price of equilibrium and total quantity in the market is: Select one: O a. P* 30 and Q* = 20 O b. P* 40 and Q* = 20 ○ C. P* 40 and Q* = 30 d. P20 and Q* = 30
The market demand in a homogeneous-product Cournot duopoly is P = 100 - 2Q, where Q = Q1 + Q2 (Firm 1 and Firm 2), and the costs functions for each firms are: TC1 = 12Q1 and TC2 = 20Q2. Instructions: Use no decimals. Use the average cost to calculate monopoly profits. Do not round if values are used to complete other calculations. Complete the following table. Q1 Q2 P Profits F1 Profits F2 F1 cheats w/ QDC, F2 colludes F1 cheats w/ QBRF, F2 2 colludes
Two firms are engaged in Cournot (simultaneous quantity) competition. Market-level inverse demand is given by P = 160 − 4Q Firm 1 has constant marginal costs of MC1 = 8, while Firm 2 has constant marginal costs of MC2 = 24. 1) Does there exist a low enough positive marginal cost for firm 1 such that firm 1 acts like a monopoly in this market, if so what is the MC if not why?
please explain in steps
All question are with regards to the following set up. There are two firms A and B. Firms compete in a Cournot Duopoly in Karhide. They set quantities qa and qB. Inverse demand is P(qA + qB) = 18 – qA – qB and costs are C(q) (in Karhide,) and firm A is a foreign firm (from Orgoreyn.) The government of Karhide engages in a strategic trade intervention by giving firm B a per unit subsidy of s. (That is, when firm B produces and sells qB units, firm B receives a payment of s * qB from the government.) You must show your work at each step, unless the questions is followed by "No work required." 3 * q for both firms. Firm B is a domestic firm (4) We now consider the government’s choice of s≥0. We can see from above thatprofits and outputs depend upon s. With that in mind, let πB(s) and qB(s) denote firm B’s profit and output as a function of the subsidy s. Let qA(s) denote firm A’s equilibrium output as a function of s. Let G(s) = πB(s) − s*qB(s) denote the government’s objective…

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