Consider the following Cournot-Stackelberg duopoly model on export subsidies: There are three countries, H, F and the rest of the world (ROW). Both H and F produce and export a product to the ROW. Let the exports of the H firm be x units and the exports of the F firm be y units. For simplicity, assume that x and y are produced only for exports and are not consumed domestically in these two countries. Both countries have the same constant marginal cost C. All assumptions and notations are the same as those in our lecture notes. Import Demand from the ROW: P(x+y) = 100 - x -y Marginal cost: C - 25 The Nash equilibrium levels of subsidies are sH = and sF = Oa 0:0 Ob. 15; 15 Oc. 20, 20 Od. None of the answers above is correct.

Consider the following Cournot-Stackelberg duopoly model on export subsidies: There are three countries, H, F and the rest of the world (ROW). Both H and F produce and export a product to the ROW. Let the exports of the H firm be x units and the exports of the F firm be y units. For simplicity, assume that x and y are produced only for exports and are not consumed domestically in these two countries. Both countries have the same constant marginal cost C. All assumptions and notations are the same as those in our lecture notes. Import Demand from the ROW: P(x+y) = 100 - x -y Marginal cost: C - 25 The Nash equilibrium levels of subsidies are sH = and sF = Oa 0:0 Ob. 15; 15 Oc. 20, 20 Od. None of the answers above is correct.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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