Identifying the output level your firm will set

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Reference no: EM133276532

Question - You are a senior analyst at an oligopolistic firm, which is considering its output strategy, which is to be announced simultaneously as that of its rival oligopolistic firm. You have the following information:

The market demand equation is P = 40 - Q where Q = Q1 + Q2. Q1 and Q2 refer to the output level of your firm and your rival's firm respectively. Thus, the expanded demand equation is P = 40 - Q1 - Q2.

The marginal cost for your firm is 5, and 8 for your rival.

You are tasked, by your supervisor, with

1. Identifying the output level your firm will set (Q1) under the Cournot Model scenario.

2. Explain why this outcome is better than that of the Stackelberg Model outcome if your firm moves second in a sequential game.

Reference no: EM133276532

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