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4. There are two different market under the Galata Bridge. One of them is fried fish sandwich and the other is pickle. Consider two Cournot competitors selling goods with demand curves given by: PF 100-qF+0.5qP Pp=100-qp +0.5qF Here F and P indices refer fish and pickle markets respectively. For the sake of simplicity, assume that there is only one seller in each market. Suppose each firm has a marginal and average cost of $10. a. Using demand equations what can you say these two goods? Are they complement, substitutes or irrelevant? How do they differ from the standard Cournot model? b. Find the equilibrium prices and quantities. c. Suppose the two firms merge. By doing so, the newly merged firm will act to maximize the joint profits Find the joint-profit maximizing price and quantities.

4. There are two different market under the Galata Bridge. One of them is fried fish sandwich and the other is pickle. Consider two Cournot competitors selling goods with demand curves given by: PF 100-qF+0.5qP Pp=100-qp +0.5qF Here F and P indices refer fish and pickle markets respectively. For the sake of simplicity, assume that there is only one seller in each market. Suppose each firm has a marginal and average cost of $10. a. Using demand equations what can you say these two goods? Are they complement, substitutes or irrelevant? How do they differ from the standard Cournot model? b. Find the equilibrium prices and quantities. c. Suppose the two firms merge. By doing so, the newly merged firm will act to maximize the joint profits Find the joint-profit maximizing price and quantities.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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4. There are two different market under the Galata Bridge. One of them is fried fish sandwich and the other is pickle. Consider two Cournot competitors selling goods with demand curves given by: PF = 100 - qF + 0.5qp Pp = 100 - qp + 0.5qF Here F and P indices refer fish and pickle markets respectively. For the sake of simplicity, assume that there is only one seller in each market. Suppose each firm has a marginal and average cost of $10. a. Using demand equations what can you say these two goods? Are they complement, substitutes or irrelevant? How do they differ from the standard Cournot model? b. Find the equilibrium prices and quantities. c. Suppose the two firms merge. By doing so, the newly merged firm will act to maximize the joint profits Find the joint-profit maximizing price and quantities. d. Are the combined profits greater or smaller from merging? That is, is merging profitable for the firms? e. Are consumers better or worse off with the firms merging? How does this compare to the mergers of Cournot competitors selling substitutes? What does this imply about antitrust policy towards mergers of firms selling complementary goods (such as airplanes and engines, computers and processors, cars and tire companies, etc).
Transcribed Image Text:4. There are two different market under the Galata Bridge. One of them is fried fish sandwich and the other is pickle. Consider two Cournot competitors selling goods with demand curves given by: PF = 100 - qF + 0.5qp Pp = 100 - qp + 0.5qF Here F and P indices refer fish and pickle markets respectively. For the sake of simplicity, assume that there is only one seller in each market. Suppose each firm has a marginal and average cost of $10. a. Using demand equations what can you say these two goods? Are they complement, substitutes or irrelevant? How do they differ from the standard Cournot model? b. Find the equilibrium prices and quantities. c. Suppose the two firms merge. By doing so, the newly merged firm will act to maximize the joint profits Find the joint-profit maximizing price and quantities. d. Are the combined profits greater or smaller from merging? That is, is merging profitable for the firms? e. Are consumers better or worse off with the firms merging? How does this compare to the mergers of Cournot competitors selling substitutes? What does this imply about antitrust policy towards mergers of firms selling complementary goods (such as airplanes and engines, computers and processors, cars and tire companies, etc).
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