Suppose in a duopoly market there are two firms, 1 and 2, each with a cost...

Suppose in a duopoly market there are two firms, 1 and 2, each with a cost function given as TC₁ = 10Q₁ and TC₂ = 10Q₂. The inverse demand in the market is P = 100 – 2(Q₁ + Q₂). The firms are homogeneous product duopoly.
1. Suppose the market is characterized by Cournot oligopoly. Calculate each firm’s profit-maximizing output, price, and profit. Be sure to show all steps needed for this question.
2. Now suppose the market is characterized by Stackelberg oligopoly. Calculate each firm’s profit-maximizing output, price, and profit.
1. Now suppose each firm colludes in its price and output decision. Calculate each firm’s profit-maximizing output, price, and profit.

Expert Solution

Rahul Sunny answered 1 year ago

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