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Consider the cournot oligopoly

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Reference no: EM132134229

Consider the following Cournot oligopoly:

  • There are two identical firms in the industry, which set their quantities produced simultaneously.
  • The two firms face a market demand curve, Q = 120 - P, in which Q = q1 + q2.
  • Each firm's cost function is ci(qi) = qi2.
  • Each firm acts to maximize its own profit.

A) Write down each firm's profit function.

B) From the profit functions, derive a best response rule for each player.

C) From the best response rules, find the Nash Equilibrium in this market.

Reference no: EM132134229

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