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Combined profits of the four firms in cournot equilibrium

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A Cournot oligopoly consists of four firms, each with a marginal cost of production of MC=10. The market demand curve is given by Q=(100-P)/3 . The four firms are looking to merge into a single firm so they can increase their profit margin by taking advantage of scale economies. Suppose that after the merger, market demand remains the same but the marginal cost of production of the merged firm decreases to MC=4.

How much larger are the profits of the merged firm compared to the combined profits of the four firms in Cournot equilibrium.

Reference no: EM132500524

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