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In the market for melons, there are two identical firms: Alpha and Beta. Each firm has...

In the market for melons, there are two identical firms: Alpha and Beta. Each firm has a constant marginal cost of $0.28 and no fixed cost (so the average cost is equal to marginal cost). The demand in the market is ?=1,000−1,000∙?.

a) What is the Cournot equilibrium (output and profit)? Show your work.

b) What is the Stackelberg equilibrium (output and profit) (assume Alpha decides first its output)?

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Rahul Sunny answered 2 years ago
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