Betrand criticized the Cournot model. Bertrand's point of criticism was that firms cannot be assumed to...

Betrand criticized the Cournot model. Bertrand's point of criticism was that firms cannot be assumed to compete through

Question 28 options:

	quantities supplied
	qualities produced
	prices set
	product differentiation

Question 29 (1 point)

In equilibrium, Bertrand competition is equivalent to the model of

Question 29 options:

	Monopolistic competition
	Perfect competition
	Unfair competition
	Ruinous competition

Question 30 (1 point)

Which statement is true? In equilibrium,

Question 30 options:

	The cartel equilibrium price is highest
	The Stackelberg leader-follower equilibrium price is higher than the Cournot duopoly equilibrium price
	Both a. and b. are correct.
	None of the above is correct.

Expert Solution

Rahul Sunny answered 1 year ago

Assume in a Cournot model, there are 3 identical firms in the market with the same...

Assume in a Cournot model, there are 3 identical firms in the market with the same constant marginal cost of 30. The demand function is P = 150 ? Q. Firms share the monopoly profit equally if they participate in the cartel. Suppose that the market game is now repeated indefinitely. Derive the condition under which the collusion/cartel will be successful. (Hint: show the range of the probability adjusted discount factor ? that makes the cartel sustainable.)

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...

Consider the equilibrium of the Cournot model of duopoly. a. Can the firms benefit from collusion...

Consider the equilibrium of the Cournot model of duopoly. a. Can the firms benefit from collusion in this instance if they happen to initially be at the intersection of the two reaction curves and the collusion is enforced? Explain your answer. b. Show that each firm has an incentive to break any collusive agreement. c. Has the experience of the international oil cartel, OPEC, supported your answers?

In lecture we saw the Cournot competition model for two firms with the same cost function....

In lecture we saw the Cournot competition model for two firms with the same cost function. Now, we are going to consider asymmetric cost functions. Assume that demand for a good is given by p=a−bQd (Qd is quantity demanded), and that there are 2 firms competing in quantities. Both have no fixed costs and a constant marginal cost. Firm 1 has a marginal cost c1, and firm 2 has a marginal cost c2. We have that a>c1>c2. Find the reaction...

WTO is criticized for no real enforcement mechanism. Do you agree with this criticism? Can WTO...

WTO is criticized for no real enforcement mechanism. Do you agree with this criticism? Can WTO promote free trade regime? Discuss two conditions for cooperative trade regime and which condition is satisfied in current WTO system.

Consider Cournot model of quantity competition between two firms, firm 1 and firm 2. Suppose the...

Consider Cournot model of quantity competition between two firms, firm 1 and firm 2. Suppose the inverse demand for the firms product is given by ?=40(?+2)−(?+1)(?1+?2)p=40(A+2)−(B+1)(q1+q2), where ??qi denotes the quantity of firm ?i, ?=1,2i=1,2, ?A is 6 and ?B is 9. Each firm's average cost is equal to ?+2c+2, where ?c is 4. a) Derive and accurately plot each firm's best response function. b) Find the (Nash) equilibrium quantities, price, profits and consumer surplus. c) Suppose next that each...

Cournot Oligopoly and Number of Firms In a Cournot oligopoly, each firm assumes that its rivals...

Cournot Oligopoly and Number of Firms In a Cournot oligopoly, each firm assumes that its rivals do not change their output based on the output that it produces. Illustration: A Cournot oligopoly has two firms, Y and Z. Y observes the market demand curve and the number of units that Z produces. It assumes that Z does not change its output regardless of the number of units that it (Y) produces, so chooses a production level that maximizes its profits....

Cournot: Consider a Cournot duopoly in which firms A and B simulta- neously choose quantity. Both...

Cournot: Consider a Cournot duopoly in which firms A and B simulta- neously choose quantity. Both firms have zero costs. Market demand is given by: P =360−3Q, where Q = qA + qB . (a) Derive each firm’s best-response function and plot them on the same graph. (b) Find the unique Nash Equilibrium. Label the Nash equilibrium in your graph from part (a). (c) Calculate total welfare in the Nash Equilibrium. (d) Calculate deadweight loss (if any) in the Nash...

Problem 1. Consider a Cournot game with n > 2 firms, where all firms are identical....

Problem 1. Consider a Cournot game with n > 2 firms, where all firms are identical. Assume the linear demand and cost functions. Solve for the symmetric Nash equilibrium. Find the price at which output is sold in the Nash equilibrium and show that the equilibrium price approaches the unit cost of production, as the number of firms increases arbitrarily. Comment on your result. Payoff function for firm 1: ?(q1, q2,...,qn) = {? - (q1 + q2 + q3 +......

What are the main features of the Cournot competition model and the Betrand competition model, respectively?...

What are the main features of the Cournot competition model and the Betrand competition model, respectively? Given examples of industries in our real life that are suitable to fit Cournot competition and Betrand competition, respectively, and explain why.

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