SHOW that merger paradox exist. all the equations too, ı would upvote if it is correct 1. Consider a market with four identical firms, each of which makes an identical product. Thedemand function of this product is P = 120 -Q where P is the price and Q is the aggregateoutput, Q = q, + q2 + 93 + q4. The production costs for firms 1, 2, and 3 are identical and givenby C(q) = 20q, for i e (1,2,3,4) where q is the output of firm i. Assume that each firm choosesher output level to maximize profits given that they act as Cournot competitors. Suppose Firm 3and Firm 4 merge. Show that the merger paradox exist.

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Consider a market with four identical firms, each of which makes an identical product. The demand function of this product is P = 120 - Q where P is the price and Q is the aggregate output, Q = 91 + q2 +93 + q4. The production costs for firms 1, 2, and 3 are identical and given by C(q) = 20q, for i E (1,2,3,4) where q, is the output of firm i. Assume that each firm chooses her output level to maximize profits given that they act as Cournot competitors. Suppose Firm 3 and Firm 4 merge. Show that the merger paradox exist.

Consider a market with four identical firms, each of which makes an identical product. The demand function of this product is P = 120 - Q where P is the price and Q is the aggregate output, Q = 91 + q2 +93 + q4. The production costs for firms 1, 2, and 3 are identical and given by C(q) = 20q, for i E (1,2,3,4) where q, is the output of firm i. Assume that each firm chooses her output level to maximize profits given that they act as Cournot competitors. Suppose Firm 3 and Firm 4 merge. Show that the merger paradox exist.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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