In the simple Cournot model, firms make their output choices simultaneously. In practice, firms sometimes make...

In the simple Cournot model, firms make their output choices simultaneously. In practice, firms sometimes make these kinds of decisions sequentially. Suppose that you manage one of the firms discussed in the Output Competition example in the text. The industry demand in this example is P ? 100 ? Q and the MC of each firm is zero.

How do your profits and those of your competitor compare to the case of simultaneous decisions discussed in the text? Would you say that this example of output competition has a first mover advantage or disadvantage?

Expert Solution

Rahul Sunny answered 2 years ago

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