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Finding equilibrium price and output

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Reference no: EM1315102

Two identical firms face linear demand. Market demand is given by P=30-Q. Suppose both firms face zero marginal costs.

1. Solve for Cournot equilibrium prices and outputs.

2. Solve for Stakelberg equilibrium prices and outputs.

3. Compare graphically consumer and producer surplus in Cournot and Stakelberg equilibria to perfect competition.

Reference no: EM1315102

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