In the duopoly market where two firm exist, the demand curve is given as follows. P=120-y (y is the total market output) Firm1 has a marginal cost of 10 and Firm 2 has a marginal cost of 20. 1. Determine the Firm1’s reaction function and the Firm2’s reaction function. 2. What is the output of each firm in the Cournot equilibrium? 3. Firm1 is Stackelberg leader, Firm2 is Stackelberg follower. How much should the leader produce in order to maximize profits? I don't know the answer of number 2 and 3. some says number 2 answer is both 60 but some also says that its each 60 and 40 units. Also, for number 3, some says its maximize profit is 140 but some says 80. I don't know what the correct answer is. please show me the correct answer and correct explanantion.
In the duopoly market where two firm exist, the
P=120-y (y is the total market output)
Firm1 has a marginal cost of 10 and Firm 2 has a marginal cost of 20.
1. Determine the Firm1’s reaction function and the Firm2’s reaction function.
2. What is the output of each firm in the Cournot equilibrium?
3. Firm1 is Stackelberg leader, Firm2 is Stackelberg follower. How much should the leader produce in order to maximize profits?
I don't know the answer of number 2 and 3. some says number 2 answer is both 60 but some also says that its each 60 and 40 units. Also, for number 3, some says its maximize profit is 140 but some says 80. I don't know what the correct answer is. please show me the correct answer and correct explanantion.
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