Only typed answer Two firms compete in a market to sell a homogeneousproduct with inverse demand function P=600-3Q.Each firm produces at a constant marginal cost of $300and has no fixed costs. Use this information to comparethe output levels and profits in settings characterized byCournot, Stackelberg, Bertrand, and collusive behavior.Instruction: Do not round intermediate calculations.Round final answers to 2 decimal places for Cournotvalues.Cournot output for each firm:Cournot profits for each firm: $Stackelberg leader output:Stackelberg follower output:Stackelberg leader profits: $Stackelberg follower profits: $1Bertrand market-level output: [Bertrand profits for each firm: $Collusive market-level output:Collusive industry-level profits: $

Cournot model refers to the competition where firms compete on the basis of output. In the…

Two firms compete in a market to sell a homogeneous product with inverse demand function P= 600-3Q. Each firm produces at a constant marginal cost of $300 and has no fixed costs. Use this information to compare the output levels and profits in settings characterized by Cournot, Stackelberg, Bertrand, and collusive behavior. Instruction: Do not round intermediate calculations.

Two firms compete in a market to sell a homogeneous product with inverse demand function P= 600-3Q. Each firm produces at a constant marginal cost of $300 and has no fixed costs. Use this information to compare the output levels and profits in settings characterized by Cournot, Stackelberg, Bertrand, and collusive behavior. Instruction: Do not round intermediate calculations.

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

Chapter12: Price And Output Determination: Oligopoly

Section: Chapter Questions

Problem 1E

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Please show work for: Two firms compete in a market to sell a homogeneous product with inverse demand function P = 600 − 3Q. Each firm produces at a constant marginal cost of $300 and has no fixed costs. Use this information to compare the output levels and profits in settings characterized by Cournot, Stackelberg, Bertrand, and collusive behavior.Instruction: Do not round intermediate calculations. Round final answers to two decimal places for Cournot values.Cournot output for each firm: Cournot profits for each firm: $ Stackelberg leader output: Stackelberg follower output: Stackelberg leader profits: $ Stackelberg follower profits: $ Bertrand market-level output: Bertrand profits for each firm: $ Collusive market-level output: Collusive industry-level profits: $
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Consider a homogeneous-product Cournot ollgopoly of 3 firms with cost functions TC(a) = 24, Sup- pose that the Inverse demand function Is P(Q) = 30 - Q. (a) Solve for Cournot-Nash equilibrlum. (b) Firm 1 and Firm 2 merge Into Firm A. Solve for the new Cournot-Nash equilibrlum. Provide an Intultive explanation for the decrease In the combined profit of the merged firms.
Q2. Consider a two-firms Cournot model with constant returns to scale. Assume also that the inverse demand function is P = 100 – 2Q, with marginal cost equal to 20for both firms, where Q = q1 + q2 . b) How do equilibrium outputs and profits vary when firm1’s cost changes. Draw a picture of this outcome.
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Select the correct statements. Note: Multiple correct, multiple selections. Topics covered: Stackelberg, Cournot, and Bertrand models. O A. Suppose the inverse market demand function is P (y) = a - by, and the marginal cost of each firm is K (same and constant). In this market, the market price will be higher if the market is a Stackelberg duopoly than the market price if it is a Cournot duopoly market. В. A Stackelberg leader will necessarily make at least as much profit as he would if he acted as a Cournot oligopolist. O C. Suppose, in a Stackelberg duopoly, the follower's output is measured on the horizontal axis. Profits to the follower will increase as we move to isoprofit lines that are further to the left. D. The equilibrium in Bertrand duopoly where both firms sell identical products is Pareto efficient. Е. In Cournot duopoly, if each firm has the same marginal MC = K, each firm produces the same level of output and earns the same profit.
Q1: What is the price-equillibrium under the assumption of the two companies colluding? What is the profit for each firm? Q2: Derive the output reaction curves for both firms and calculate the price-output equllibrium under this assumption. What is the profit for each firm?
1) The two firms in an industry, A and B, use a constant returns to scale technology, so face marginal cost c. Market demand conditions are described by the relationship p + p₁x po = 0, where po and p₁ are (constant) parameters, x is the industry output, and p is the market price. Write a report in which you a) Set out the assumptions which underlie the Cournot, and Bertrand, models of competition. b) Demonstrate that in Cournot competition, firms produce less than in Bertrand competition, so that the market price is higher in Cournot competition, and firms make greater profits. c) Explain how we can adapt the Cournot model of competition to set up the Stackelberg model (you should assume that firm A acts as the quantity leader). Define the concept of subgame perfection, and apply that to derive the subgame perfect equilibrium in the Stackelberg model, demonstrating how firm A benefits from being the quantity leader.
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10Two firms produce differentiated products. The demand for each firm’s product is as follows:  Demand for Firm 1: q1 = 20 – 2p1 + p2  Demand for Firm 2: q2 = 20 – 2p2 + p1 Both firms have the same cost function: c(q) = 5q. Firms compete by simultaneously and independently choosing their prices and then supplying enough to meet the demand they receive. Please compute the Nash equilibrium prices for these firms.
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