(1) Suppose duopolists face the following market demand: D=100-2P And both have MC=20 (a) Assume they...

(1) Suppose duopolists face the following market demand:

D=100-2P

And both have MC=20

(a) Assume they compete by simultaneously choosing prices (Bertrand-style). What is the Nash equilibrium outcome? List price, quantity supplied by each firm, and profits for each firm. (b) Assume they compete by simultaneously choosing quantities (Cournot-style) with prices set to clear the market (i.e. demand=supply). What is the Nash equilibrium outcome? List price, quantity supplied by each firm, and profits for each firm. (c) Assume the firms successfully collude by setting prices at the monopoly price and splitting the demand in half. What is the outcome? List price, quantity supplied by each firm, and profits for each firm.

Expert Solution

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Rahul Sunny answered 2 months ago

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