Consider the constant elasticity Cournot example from class. Two firms are facing market demand D(P) =...

Consider the constant elasticity Cournot example from class. Two firms are facing market demand D(P) = A/P^ε . Firms have constant marginal costs c1 and c2 respectively. Derive the expression for the equilibrium market power m1 of firm 1. If c1 = c2, then how does m1 depend on ε?

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Rahul Sunny answered 9 months ago

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