Change about the nature of competition between the two firms

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Suppose that inverse demand is given by p(Q) = a-bQ, where Q is total quantity supplied in the market. There are two firms in the market, each with a cost function of c(q) = cq

A) If we were to assume that firms competed in prices instead of quantities, what would change about the nature of competition between the two firms?

B) Explain how capacity constraints or product differentiation could change the answer to Question A

Reference no: EM131097719

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