Walmart (firm 1) and Amazon (firm 2) are a duopoly in the grocery market. They are faced with an inverse demand of P(Q1, Q2) = 16−2 (Q1+Q2) and total costs of TC(Qi) = 2Q2i, i= 1,2. Note that the marginal cost is not constant! 1. Obtain the Cournot equilibrium quantities and profits. 2. Obtain the Stackelberg equilibrium in which Walmart moves first. Compare with the Cournotequilibrium. 3. Obtain the cartel outcome (= shared monopoly). Compare with Stackelberg and Cournot.
Walmart (firm 1) and Amazon (firm 2) are a duopoly in the grocery market. They are faced with an inverse demand of P(Q1, Q2) = 16−2 (Q1+Q2) and total costs of TC(Qi) = 2Q2i, i= 1,2. Note that the marginal cost is not constant! 1. Obtain the Cournot equilibrium quantities and profits. 2. Obtain the Stackelberg equilibrium in which Walmart moves first. Compare with the Cournotequilibrium. 3. Obtain the cartel outcome (= shared monopoly). Compare with Stackelberg and Cournot.
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 2E
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Walmart (firm 1) and Amazon (firm 2) are a duopoly in the grocery market. They are faced with an inverse demand of P(Q1, Q2) = 16−2 (Q1+Q2) and total costs of TC(Qi) = 2Q2i, i= 1,2. Note that the marginal cost is not constant!
1. Obtain the Cournot
2. Obtain the Stackelberg equilibrium in which Walmart moves first. Compare with the Cournotequilibrium.
3. Obtain the cartel outcome (= shared
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