Cournot-nash equilibrium quantities-profits-market price

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Reference no: EM131103630

Consider a Cournot duopoly with the inverse demand P= 260-2Q. Firms 1 and 2 compete by simultaneously choosing their quantities. Both firms have constant marginal and average cost MC=AC = 20 .

a. Find each firm’s best response function.

b. Find the Cournot-Nash equilibrium quantities, profits and market price.

c. Plot the best response curves and illustrate the equilibrium point.

d. Suppose, instead, that firm 1 chooses first and 2 follows. Find the Stackelberg equilibrium quantities, profits and market price.

Reference no: EM131103630

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