The market for a standard-sized cardboard container consists of two firms: CompositeBox and Fiberboard. As the...

The market for a standard-sized cardboard container consists of two firms: CompositeBox and Fiberboard. As the manager of CompositeBox, you enjoy a patented technology that permits your company to produce boxes faster and at a lower cost than Fiberboard. You use this advantage to be the first to choose its profit-maximizing output level in the market. The inverse demand function for boxes is Q= 200-1/6P .CompositeBox�s costs are C_C(Q_C) = 60Q_C, and Fiberboard�s costs are C_F(Q_F) = 120Q_F. Ignoring antitrust considerations, by how much would your profits increase if you merged with Fiberboard? What will you have to offer Fiberboard to accept your offer?

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Rahul Sunny answered 1 year ago

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