Consider two identical firms in a Cournot competition. The market demand is P = a –...

Consider two identical firms in a Cournot competition. The market demand is P = a – bQ. TC₁ = cq₁ = TC₂ = cq₂ .

Find the profit function of firm 1.
Maximize the profit function to find the reaction function of firm 1.
Solve for the Cournot-Nash Equilibrium.
Carefully discuss how the slope of the demand curve affects outputs and price.

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Rahul Sunny answered 10 months ago

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