= Consider two firms, firm 1 and firm 2, facing the demand curve P = 24-2Q, where Q Q₁+Q₂. The firms' cost functions are C₁(Q₁) = Q and C₂ (Q₂) = 2Q². Derive the reaction functions if the firms behave non-cooperatively. a. b. C. d. What is each firm's Cournot-Nash-Equilibrium output and profit if they behave non-cooperatively? Draw the firms' reaction functions and show the equilibrium. Suppose that both firms have entered the industry as a cartel. What is the joint profit-maximising level of output? How much will each firm produce? How much is the profit of each firm?

= Consider two firms, firm 1 and firm 2, facing the demand curve P = 24-2Q, where Q Q₁+Q₂. The firms' cost functions are C₁(Q₁) = Q and C₂ (Q₂) = 2Q². Derive the reaction functions if the firms behave non-cooperatively. a. b. C. d. What is each firm's Cournot-Nash-Equilibrium output and profit if they behave non-cooperatively? Draw the firms' reaction functions and show the equilibrium. Suppose that both firms have entered the industry as a cartel. What is the joint profit-maximising level of output? How much will each firm produce? How much is the profit of each firm?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.5P

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