Consider a duopolistic market with two firms, A and B, facing a market demand curve of P=100-qA –qB for the same product. Assume that the cost of production is CA=2qA for firm A and CB=4qB for firm B. Suppose that both firms make output decision simultaneously. In Nash equilibrium, the firm A should produce unit, and its profit is In Nash equilibrium, the firm B should produce unit, and its profit is .

Consider a duopolistic market with two firms, A and B, facing a market demand curve of P=100-qA –qB for the same product. Assume that the cost of production is CA=2qA for firm A and CB=4qB for firm B. Suppose that both firms make output decision simultaneously. In Nash equilibrium, the firm A should produce unit, and its profit is In Nash equilibrium, the firm B should produce unit, and its profit is .

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.5P

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