Corresponding to the intersection of the response functions

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Reference no: EM13832466

Cournot (quantity) and Stackelberg (sequential) (30 Points) Two identical firms, Firm 1 and Firm 2, compete in quantity in a market where inverse demand is P(Q) = 100 − Q and there exists a constant marginal cost of 20 per unit.

(a) Find the Cournot equilibrium

i. Find the response functions q1(q2) and q2(q1)

ii. Plot the response functions on a single graph with the axes labeled

iii. Find the quantities ˆq1 and ˆq2 corresponding to the intersection of the response functions

(b) Find the Stackelberg equilibrium

i. If Firm 1 moves first, what is the profit maximizing level of production, q ∗ 1?

ii. Find Firm 2’s level of production, q ∗ 2 , given what you found in part i.

Reference no: EM13832466

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Corresponding to the intersection of the response functions : Cournot (quantity) and Stackelberg (sequential) Two identical firms, Firm 1 and Firm 2, compete in quantity in a market where inverse demand is P(Q) = 100 − Q and there exists a constant marginal cost of 20 per unit. Find the quantities ˆq1 and ˆq2 c..

Find the cournot equilibrium : Two identical firms, Firm 1 and Firm 2, compete in quantity in a market where inverse demand is P(Q) = 100 − Q and there exists a constant marginal cost of 20 per unit. Find the Cournot equilibrium. Find the response functions q1(q2) and q2(q1)

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