Calculate the stackelberg equilibrium

Reference no: EM13695944

The market for widgets consists of two firms that produce identical products. Competition in the market is such that each of the firms independently produces a quantity of output, and these quantities are then sold in the market at a price that is determined by the total amount produced by the two firms. Firm 2 is known to have a cost advantage over Firm 1. A recent study found that the (inverse) market demand curve faced by the two firms is P=270-2Q and the marginal cost is 30 for each firm.

Determine the reaction function for each firm under Cournot Equilibrium.

How much outputs will each firm produce in equilibrium?

Calculate the Stackelberg equilibrium.

How much outputs will each firm produce in equilibrium?

What are the equilibrium profits for each firm?

Reference no: EM13695944

Questions Cloud

What would be the eventual equilibrium output : What would be the eventual equilibrium output for each of two competitors under the Cournot-Stackelberg Reaction Model if the Market demand is Q=20-P? (Assume that MC = 0).

Why would firms accept their competitors coupons : Why would firms accept their competitors’ coupons? Under what circumstances would a merchant prefer to use competitors’ coupons? Under what circumstances would they prefer to distribute their own coupons? (In answering these questions, use a price di..

The economy is in a boom and the inflationary gap : The economy is in a boom and the inflationary gap is large. Describe the discretionary and automatic fiscal policy actions that might occur.

What is the government budget balance : Suppose that in the United States, investment is $1,600 Billion, savings is $1,400 billion, government expenditure on goods and services is $1,500 billion, exports are $2,000 billion, and its imports are $2,500 billion. What is the amount of tax reve..

Calculate the stackelberg equilibrium : The market for widgets consists of two firms that produce identical products. Competition in the market is such that each of the firms independently produces a quantity of output, and these quantities are then sold in the market at a price that is de..

Selling several units of homogeneous product : A monopoly is considering selling several units of a homogeneous product as a single package. A typical consumer’s demand for the product is Qd = 110 - 0.5P, and the marginal cost of production is $140. a. Determine the optimal number of units to put..

Data for a monopolist’s total revenue total cost : Data for a monopolist’s total revenue (tr), total cost (tc), and output (q), for 48 consecutive months, appear in the file data#1. Suppose that the monopolist’s economic models for total revenue and total revenue and total cost are given respectively..

Concerned about the trust customers : Explain why managers should be concerned about the trust customers have in their brand or company and what they can do to build trust.

Argue that deficit spending promotes economic growth : Keynesian economists argue that deficit spending promotes economic growth because it stimulates aggregate demand in the economy. Monetary economists argue that the benefits of deficit spending are offset by the crowding out of private investment. Gra..

User Account

All Pages