13.17. Consider a market in which the market demand curve is given by P = 18 - X - Y, where X is Firm 1's output, and Y is Firm 2's output. Firm 1 has a marginal cost of 3, while Firm 2 has a marginal cost of 6. a) Find the Cournot equilibrium outputs in this market. How much profit does each firm make? b) Find the Stackelberg equilibrium in which Firm 1 acts as the leader. How much profit does each firm make?
13.17. Consider a market in which the market demand curve is given by P = 18 - X - Y, where X is Firm 1's output, and Y is Firm 2's output. Firm 1 has a marginal cost of 3, while Firm 2 has a marginal cost of 6. a) Find the Cournot equilibrium outputs in this market. How much profit does each firm make? b) Find the Stackelberg equilibrium in which Firm 1 acts as the leader. How much profit does each firm make?
Chapter1: Making Economics Decisions
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![13.17. Consider a market in which the market demand curve is given by P = 18 - X - Y,
where X is Firm 1's output, and Y is Firm 2's output. Firm 1 has a marginal cost of 3,
while Firm 2 has a marginal cost of 6.
a) Find the Cournot equilibrium outputs in this market. How much profit does each firm
make?
b) Find the Stackelberg equilibrium in which Firm 1 acts as the leader. How much
profit does each firm make?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F475639b2-474b-40a8-9f9b-40a10cc32c20%2Fe34cb6e6-a19e-4098-9a0b-69a8b261d64a%2Fn4hc3h_processed.png&w=3840&q=75)
Transcribed Image Text:13.17. Consider a market in which the market demand curve is given by P = 18 - X - Y,
where X is Firm 1's output, and Y is Firm 2's output. Firm 1 has a marginal cost of 3,
while Firm 2 has a marginal cost of 6.
a) Find the Cournot equilibrium outputs in this market. How much profit does each firm
make?
b) Find the Stackelberg equilibrium in which Firm 1 acts as the leader. How much
profit does each firm make?
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
Step 1
Given;
Market demand curve;
where:-
X= Firm 1's output
Y= Firms 2's output
Firm 1' s marginal cost;
Firm 2's marginal cost;
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