If a duopolist has a linear demand curve of the form Q=400 – P. Assuming each firm has totalcost (TC=3000+100Q). Calculate the profit-maximizing price-quantity combinations using thetwo oligopoly pricing models listed below demonstrating that:A. Under the Cournot model, both firms will earn same level of profit and determine industryprofit and explain why this is would be the case.B. Under the Stackelberg model the leader will earn more than twice the profit of the followerand that total industrv profits will be lower than under both Cournot models. Explain why this iswould be the case.

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Answered: If a duopolist has a linear demand…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider two Cournot oligopolists, firm 1 and firm 2, in a homogenous product market. The market demand is P = 100 – 3Q and each firm has a constant marginal cost MC=10. The Cournot equilibrium quantity for each firm is: a. 7.5 b. 10 c. 5 d.15
Duopolists following the Bertrand pricing strategy face a market demand curve given by P = 90 - 2Q where Q is total market demand. Each firm can produce output at a constant marginal cost of 40 per unit. How much profit will each firm make? Duopolists following the Cournot strategy face a market demand curve given by P = 90 - 2Q where Q is total market demand. Each firm can produce output at a constant marginal cost of 40 per unit. If firm 1 moves first, how much profit will firm 1 make? Duopolists following the Cournot strategy face a market demand curve given by P = 90 - 2Q where Q is total market demand. Each firm can produce output at a constant marginal cost of 40 per unit. If firm 1 moves first, how much profit will firm 2 make? Round to the nearest whole number.
Suppose two firms compete as Bertrand duopolists for an identical product, where demand is given by Q = 5000 – 50P and both firms have marginal cost of 10 per unit of output. If firm 1 has capacity of 1500 and firm 2 has capacity of 2000, what will the equilibrium price be in this market?
Please do question 2's a b and c please thank you!
Two firms are engaged in Cournot (simultaneous quantity) competition. Market-level inverse demand is given by P = 160 − 4Q Firm 1 has constant marginal costs of MC1 = 8, while Firm 2 has constant marginal costs of MC2 = 24. 1) Does there exist a low enough positive marginal cost for firm 1 such that firm 1 acts like a monopoly in this market, if so what is the MC if not why?
Problem 3 Consider the infinitely repeated game with the discount factor & € (0, 1) of the following Cournot duopoly model with inverse demand function P(Q) = a Q if Q≤ a 0 if Q > a where Q = 91 +92 and cost functions Ci(qi) = cqi, i = 1,2. The profit function of firm i is given by Ti (91, 92) = qiP(9₁ +92) - cqi. Consider the following grim-trigger strategy. Produce half the monopoly output in the first period and as long as everybody has produced that amount so far. Otherwise produce the Cournot output. Verify that this is a subgame perfect equilibrium.
All question are with regards to the following set up. There are two firms A and B. Firms compete in a Cournot Duopoly in Karhide. They set quantities qa and qB. Inverse demand is P(qA + qB) = 18 – qA – qB and costs are C(q) (in Karhide,) and firm A is a foreign firm (from Orgoreyn.) The government of Karhide engages in a strategic trade intervention by giving firm B a per unit subsidy of s. (That is, when firm B produces and sells qB units, firm B receives a payment of s * qB from the government.) You must show your work at each step, unless the questions is followed by "No work required." 3 * q for both firms. Firm B is a domestic firm (4) We now consider the government’s choice of s≥0. We can see from above thatprofits and outputs depend upon s. With that in mind, let πB(s) and qB(s) denote firm B’s profit and output as a function of the subsidy s. Let qA(s) denote firm A’s equilibrium output as a function of s. Let G(s) = πB(s) − s*qB(s) denote the government’s objective…
Answer neatly with proper explanation of each option given. Thank you
2. Consider a standard Cournot triopoly model, i.e., inverse demand p(Q) = a - bQ, where Q = -19i and a, b>0, output cost function ci(qi) = cqi for i = 1, 2, 3, c> 0. qi (a) Find the symmetric equilibrium output (q*), price (p*), and profit levels (*). (b) Suppose that firms 1 and 3 merge horizontally, i.e., form a single larger firm, call it firm 1, and compete against firm 2 as in a Cournot duopoly. The newly formed firm 1 and firm 2 have identical cost functions, which are the ci(qi) discussed above, and face the same inverse market demand p(Q). Assume that firm 1 and firm 3 split equilibrium profits. Find for i = 1, 2, 3 and compare with part (a). Are firm 1 and firm 3 better-off after the merge?
If each firm acts to maximize its profits, taking its rival’s output as given (i.e., the firmsbehave as Cournot oligopolists), what will be the equilibrium quantities selected by each firm?What is the total output, and what is the market price? What are the profits for each firm?

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