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Derive the reaction functions of the two firms

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Reference no: EM131574414

Question - Two firms share an industry in which total product demand is given by Q = 20-p. The average cost of production for each firm is 8.

(a) Derive the reaction functions of the two firms (note that the firms are symmetric).

(b) Find the Cournot-Nash equilibrium (in quantities produced by each firm) in this market.

(c) If the firms collude so as to maximize profits in the industry, and each receives an equal share of the profits, what should the output levels of the two firms be?

Reference no: EM131574414

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