am. 124. Cournot Duopoly with differentiated products Suppose the firms in a duopolyproduce differentiated products (products that are similar but have attributes thatdistinguish them from other products in the market.) The inverse demand for Firm 1is p₁ =52 91 -0.5q2. The inverse demand for Firm 2 is p2 = 4092-0.5q1. Eachfirm has a marginal cost of MC = 1. Solve for Cournot-Nash equilibrium quantities.

Step 1: Understand the Cournot ModelThe Cournot model assumes firms simultaneously choose quantities…

Answered: Cournot Duopoly with differentiated…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter14: Monopolistic Competition And Product Differentiation

Section: Chapter Questions

Problem 16P

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Firms like Papa John’s, Domino’s, and Pizza Hut sell pizza and other products that aredifferentiated in nature. While numerous pizza chains exist in most locations, thedifferentiated nature of these firms’ products permits them to charge prices abovemarginal cost. Given these observations, is the pizza industry most likely a monopoly,perfectly competitive, monopolistically competitive, or an oligopoly industry? Use thecausal view of structure, conduct, and performance to explain the role of differentiationin the market for pizza. Then apply the feedback critique to the role of differentiation inthe industry.
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Problem 1. HHI in the Bertrand Triopoly Equilibrium It's a Bertrand Triopoly - hence we know there are 3 firms in the industry-in-question, who competes in "price". The inverse demand functions for Firm 1, 2, and 3 are as follows: q1 = 40 - 1.5p1 +0.5p2 +p3 q2 = 40 + 1.5p1 - 3p2+p3 q3 = 40 + 2p1 + 1.5p2 - 4p3 For each firm, the marginal cost of production is $2.50/unit produced and sold. Apparently, the firms' products are differentiated. You cannot impose symmetry across firms. Therefore, please solve each firm's profit maximization problem, impose equilibrium, and solve for each firm's "action" in equilibrium. After that, please calculate the Herfindahl- Hirschman Index (HHI) in the industry in equilibrium.
Suppose the inverse demand for a duopoly is given by P = 30 – Q. Marginal cost is given by €12. The quantity that each firm will produce in the Cournot equilibrium is A. 12 B. 6 C. 3 D. 18
Answer the given question with a proper explanation and step-by-step solution. The inverse market demand in a homogeneous-product Cournot duopoly is P = 200 – 2(Q1 + Q2) and costs are C1(Q1) = 26Q1 and C2(Q2) = 32Q2. Firm 1: Q1 = ? - Q2Firm 2: Q2 = ? - Q1 b. Calculate each firm’s equilibrium output.Firm 1:Firm 2: c. Calculate the equilibrium market price.$ d. Calculate the profit each firm earns in equilibrium.Firm 1: $Firm 2: $
Consider the following 2-firm (firm 1 and 2) model of Bertrand duopoly with differen- tiated products. Demand for firm i is q:(Pi, P;) = a – Pi – bi.Pj costs are zero for both firms. The sensitivity of firm i's demand to firm j's price is measured by bị. (a) First suppose b1 # b2. Find the equilibrium prices p1 and p2. (b) Deduce that if the two firms are identical, they choose the same price p = 216) where b = b1 = b2. а
SUB-SECTION B2 13 Electra and Luminux are the only two firms who provide electricity in a local market as a Cournot duopoly. The electricity provided by the two firms is identical and consumers are indifferent about which firm they will purchase electricity from. The market inverse demand for electricity is P = 100 - 2Q, where is the aggregate quantity of electricity produced by the two firms, qe qL. Electra has a marginal cost of 12, while Luminux has a marginal cost of 20. Assume that neither firm has any fixed costs. (a) Determine each firm's reaction curve and graph it. How much electricity will each firm produce in a Cournot equilib- rium? (c) What will the market price for electricity be? How much profit does each firm make? (e) Suppose now that the two firms move sequentially with one of them acting as a Stackelberg leader. Do you expect the outcome to the closer to perfect competition when Electra, or when Luminux, moves first? Explain your answer.
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Short Answer Question: Consider a Bertrand Duopoly Model. Market demand curve is given by Q = 200 – P., Firm A has a marginal cost of S20 and Firm B has a marginal cost of $50. In equilibrium, what is the market price? How many units does each firm produce? Calculate each firm's profit.
Please answer the attached question below. It is part of Industrial Economics.
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What are the key differences between the increasing returns to scale and monopolistic competition model and the Hecksher-Ohlin (H-O) model of trade? How does an industry adjust from long-run equilibrium without trade to long-run equilibrium with trade under increasing returns to scale and monopolistic competition model of trade? What happens to the firm's demand curve, number of firms, the size of firms, price of products, and profits/losses of firms?

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