Assume that there are two companies (A) and (B) acting as Cournot duopolists in an industry, where there are very high barriers to entry. The two companies behave strategically by choosing output levels, produce a homogeneous product, and have constant marginal costs. Marginal cost for company A is £10 and for company B is £20. Fixed cost is zero for both companies. The whole industry demand is given by Q = 390-P. Q4 a) Find the Cournot - Nash equilibrium output levels for each of the two companies. Find the market price and total output. You need to show all your working/ calculations step-by-step, each step has a sub-mark.

Assume that there are two companies (A) and (B) acting as Cournot duopolists in an industry, where there are very high barriers to entry. The two companies behave strategically by choosing output levels, produce a homogeneous product, and have constant marginal costs. Marginal cost for company A is £10 and for company B is £20. Fixed cost is zero for both companies. The whole industry demand is given by Q = 390-P. Q4 a) Find the Cournot - Nash equilibrium output levels for each of the two companies. Find the market price and total output. You need to show all your working/ calculations step-by-step, each step has a sub-mark.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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