Three oligopolistic banks operate in the loan market with the inverse demand function given by r (Q) = a-Q, where r is the interest rate per unit of loan and Q = 91+92 +93 and > 0 is the total amount of loans issued by bank i = 1,2,3. Also, a > 0 is a constant. The cost of funds for bank i is given by cɖ, where c = (0, a) is a constant. A bank's profit from loans is (r — c) qi • qi

Three oligopolistic banks operate in the loan market with the inverse demand function given by r (Q) = a-Q, where r is the interest rate per unit of loan and Q = 91+92 +93 and > 0 is the total amount of loans issued by bank i = 1,2,3. Also, a > 0 is a constant. The cost of funds for bank i is given by cɖ, where c = (0, a) is a constant. A bank's profit from loans is (r — c) qi • qi

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter15: Contracting, Governance, And Organizational Form

Section: Chapter Questions

Problem 1.3CE

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