Consider a Cournot oligopoly with two firms, where the demand curves are given by P, = 100- Q1 - 2Q2 P2 = 100– 2Q, –Q2 and that costs are given by TC(Q1) = Q, , MC, = 2Q1, TC(Q2) =Q²2, and MC2 = 2Q2.
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- 40 36 32 28 24 20 16 12 8 47 0 P 4 Firm in oligopoly market MC 2 MR MC 1 D 8 12 16 20 24 28 32 40. Assuming MC2 to be the true marginal cost curve for this oligopoly firm, what price will this firm charge? (a) $8 Ⓒ (b) $12 (c) $15 (d) $20 QConsider a simple monopolistic competition industry (many firms) in whicheach firm in the industry has one store. The store costs $200 per week andthe marginal cost is $10 per unit of output in addition to the fixed cost of the store. Hint: Mathematically this problem can be solved just like a monopoly problem. (a) If the typical the demand facing each individual firm is QD = 40−P eachweek, what price will a typical firm in this industry charge? (Hint: IfQD = 40 − P then P = 40 − QD and MR = 40 − 2QD). (b) Is the firm making a positive profit? What is the producer surplus? Whatis the profit after fixed costs? (c) Will new firms enter the market if demand stays the same and new firmsface the same demand and have the same costs? (d) In general, what is the long run profit of an average firm in a monopolistically competitive market.Ouestions 2 Boeing and Airbus are duopoly competitors for airplanes. Let us assume that worldwide market demand for airplanes is given by p=10000 -5Q and that costs of production are identical for both manufacturers and specified as C(q) -2q Calcute market price and total quantity if a) Airbus and Boeing are in Cournot competation b) Airbus and Boeing are in Bertrand competation
- Cournot’s Model of Duopoly) Joe and Rebecca are small-town ready-mix concrete duopolists. The market demand function is Qd=5500-25P, where P is the price of a cubic metre of concrete and Qd is the number of cubic metres demanded every year. The marginal cost is $40 per cubic metre. Competition in this market is described by the Cournot model. (a)Given Rebecca’s output is 2000, what is Joe’s residual demand function? What is Joe's output so he maximizes his profit? (b)If Rebecca’s output is qR, what is Joe’s best response function? (c)If Joe’s output is qj, what is Rebecca’s best response function? (d)Plot both Joe and Rebecca’s best response functions on one graph, where the the horizontal axis represents Rebecca’s output qR and the vertical axis represents Joe's output qR. (e)What is the meaning of the interception of the two best response functions?Repeated Game and Collusion Consider two firms that are playing a Bertrand game at each stage of an infinitely repeated game. They have the same discount factor 8 < 1 and the same constant marginal cost c. If they co-operate in the stage game then they each produce half the monopoly quantity q" and sell at the monopoly price p". (a) What strategies, based on a threat of charging c in the stage game, will produce the collusive outcome? (b) For what values of o do these strategies constitute a sub-game perfect Nash equi- librium?In the mobile phone market, Samsung and Apple constitute a duopoly in the production of devices.The American firm has the following demand q_a = 10 - p_a + 0.25p_s, and the Korean firm, q_s = 20 -p_s+ 0.5p_a. Because both firms assembly their devices in China, their cost structure is the same andequal to ?(q) = 10q, answer the following questions.a) What would be the equilibrium (quantity, price, and profit) in this market, and interpret youranswer.b) If they decide to form a cartel, what are the new quantities, prices, and profits?
- A10 Consider an industry with 2 firms, each firm with marginal costs equal to 0. Market demand curve is given by Q=60- P. With 2 firms, we can write Q=Q1+ Q2 . Suppose that each firm behaves as a “Cournot” competitor, that is, choose the optimal quantity maximizing the profits in a strategic way.(a) What would be the values of Q1, and Q2 in equilibrium? (b) Suppose firm 1 can “commit” its level of output in advance. In other words, if firm 1 announces to produce Q1, firm 2 needs to decide how much to produce assuming that firm 1 would indeed produce Q1. What’s the level of Q1 firm 1 would choose to maximize its profit?1.Suppose a second firm namely Pure Water Ltd enters the market. Let q1 be the output of Clear Water and q2 is the output of Pure Water. Market demand is thus now given by q1+q2 = 90 - P. Assuming Pure Water has the same costs as Clear Water. If each firm is to maximise its profits, taking its rival's output as given (i.e., behave as Cournot oligopolists): (i) Find the equilibrium quantities selected by each firm? (ii) Find the total output and what is the market price and profit for each firm? (iii) Why is the market (public) better off as under the monopolist in question (a)?Please
- Consider a Cournot oligopoly with three firms i = 1, 2, 3. All firms 1. The inverse demand have the same constant marginal cost c = function of the market is given by P = 9-Q, where P is the market price, and Q =E=1 9i is the aggregate output. 13 (a) Solve for the Nash equilibrium of the game including firm out- puts, market price, aggregate output, and firm profits (Hint: the NE is symmetric). (b) Now suppose these three firms play a 2-stage game. In stage 1, they produce capacities q1, q2 and 73, which are equal to the Nash equilibrium quantities of the Cournot game characterised by part (a). In stage 2, they simultaneously decide on their prices p1, p2 and p3. The marginal cost for each firm to sell up to capacity is 0. It is impossible to sell more than capacity. The residual demand for firm i is 9 - Pi – Eiti; Ij if p; > p; for all j # i D; (pi, p-i) = 9-Pi 3 if pi = Pj for all j + i . if p; < p; for all j + i 9 - Pi (Note, here we assume that the efficient/parallel rationing ap-…Cournot Duopoly Suppose that Coca Cola and Pepsi companies compete in quantity sold in a small town. The market demand function for soda in the small town is given by the demand function: Q 10,000 P where Q is the aggregate quantity demanded and P is the price of a can of soda. Let Qp be the number of cans of soda sold by the Pepsi company and Qc be the number sold by the Coca Cola company. Assuming that the marginal cost of producing a can of soda is the same for both companies and equal to 50 cents, find the Nash equilibrium of the soda market in this small town. Illusrate the Nash equilibrium by using the best repsonse functions of both companies. %3DWEBCAM RECORDING Industrial Economics la 9 Suppose a duopoly where the inverse demand is given by p = 50 – 2Q with Q = q1 + q2. The cost function is TC(q;) = 10q; +72, i.e. a non fixed costs are equal to 72, for both firms. Supposing that one of the two firms acts as a Stackelberg leader, the leader's output which maximizes its data profit is: gio max: ntrassegna O (a) 12 nda O (b) 10 O (c) 9 O (d) 8 Precedente Successivo