Question

In: Economics

Three Cournot competitors produce in a market with indirect demand P (Q) = 15- Q The...

Three Cournot competitors produce in a market with indirect demand

P (Q) = 15- Q


The marginal cost for all firms is constant and equals 3.
a). What are the Cournot equilibrium quantities, price, and firm profits?
b) Two of the three firms want to merge. Calculate the new equilibrium quantities, price, and firm profits if
the post-merger market structure is the asymmetric duopoly.
c). Compare the merged firms’ pre- and post-merger profits. Is this merger good for the merging firms? for
consumers? for the outside firm?

Solutions

Expert Solution

Rahul Sunny answered 6 months ago
Next > < Previous

Related Solutions

Consider a modified example from class. There are 3 Cournot competitors in the market with P(Q)...
Consider a modified example from class. There are 3 Cournot competitors in the market with P(Q) = 20 − Q. Marginal costs are MC1(q1) = 10 − q1, MC2(q2) = 9 and MC3(q3) = 6. Firms 1 and 2 decide to merge. Does firm 3 win or lose from this merger?
Assume that two firms are in a Cournot oligopoly market. Market demand is P=120 - Q...
Assume that two firms are in a Cournot oligopoly market. Market demand is P=120 - Q where Q isthe aggregate output in the market and P is the price. Firm 1 has the cost function TC(Q1)=30 + 10Q1 and Firm 2 has the cost function TC(Q2)=15 + 20Q2. a) Write down the Profit function of Firm 1: Profit function of Firm 2: b) Using the profit functions in part (a), obtain the reaction function of Firm 1 to Firm 2....
Cournot duopolists face a market demand curve given by P = 90 -Q where Q is...
Cournot duopolists face a market demand curve given by P = 90 -Q where Q is total market demand. Each firm can produce output at a constant marginal cost of 30 per unit. There are no fixed costs. Determine the (1) equilibrium price, (2) quantity, and (3) economic profits for the total market,(4) the consumer surplus, and (5) dead weight loss.Show Work
Cournot duopolists face a market demand curve given by P = 90 - Q where Q...
Cournot duopolists face a market demand curve given by P = 90 - Q where Q is total market demand. Each firm can produce output at a constant marginal cost of 30 per unit. There are no fixed costs. Determine the (1) equilibrium price, (2) quantity, and (3) economic profits for the total market, (4) the consumer surplus, and (5) dead weight loss.
Cournot duopolists face a market demand curve given by P = 90 - Q where Q...
Cournot duopolists face a market demand curve given by P = 90 - Q where Q is total market demand. Each firm can produce output at a constant marginal cost of 30 per unit. There are no fixed cost. (Just need B through C answer please) a. Find the equilibrium price, quantity and economic profit for the total market, consumer surplus and Dead weight loss b. If the duopolists in question above behave, instead, according to the Bertrand model, what...
Messrs Bertrand and Cournot are competitors in the market for gadgets. The demand conditions in this...
Messrs Bertrand and Cournot are competitors in the market for gadgets. The demand conditions in this market are given by the equation Q=1000-P, and both Bertrand and Cournot can supply the market with gadgets at a constant marginal cost equal to five crowns (they incur no other costs to run their enterprises). i. Describe in detail what conditions will give rise to price competition between Bertrand and Cournot. Given that they compete by choosing prices, what is the equilibrium price...
The demand equation for a market is given by p(q + 3) = 15 and, for...
The demand equation for a market is given by p(q + 3) = 15 and, for some constant α, the supply equation is q = αp − 1 where p is the price and q is the quantity. Given that the equilibrium price for this market is three, determine the equilibrium quantity and the value of α. Find the consumer and producer surpluses?
24. Cournot duopolists face a market demand curve given by P = 90 - Q where...
24. Cournot duopolists face a market demand curve given by P = 90 - Q where Q is total market demand. Each firm can produce output at a constant marginal cost of 30 per unit. There are no fixed costs. Determine the (1) equilibrium price, (2) quantity, and (3) economic profits for the total market, (4) the consumer surplus, and (5) dead weight loss. 25. If the duopolists in question 24 behave according to the Stackelberg Leader-Follower model, determine the...
A) Two firms operate as Cournot competitors. Inverse demand is P = 120 - 2Q. Firm...
A) Two firms operate as Cournot competitors. Inverse demand is P = 120 - 2Q. Firm 1 has total cost function c(q1) = 10q1 and Firm 2 has total cost function c(q2) = 20q2. Solve for the Nash equilibrium in quantities and determine the equilibrium price. B) Now assume the rms are Bertrand competitors, simultaneously choosing prices. Solve for the Nash equilibrium in prices and determine the equilibrium quantities.
a.) Two identical firms compete as a Cournot duopoly. The market demand is P=100-2Q, where Q...
a.) Two identical firms compete as a Cournot duopoly. The market demand is P=100-2Q, where Q stands for the combined output of the two firms, Q=q1 +q2. The marginal cost for each firm is 4. Derive the best-response functions for these firms expressing what q1 and q2 should be. b.) Continuing from the previous question, identify the price and quantity that will prevail in the Cournot duopoly market c.) Now suppose two identical firms compete as a Bertrand duopoly. The...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT