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Suppose there are three firms with the following demand functions in an oligopoly market:
q1=16-2p1+p2+p3
q2=16+p1-2p2+p3
q3=16+p1+p2-2p3
where p1, p2,p3 are prices chosen by firm 1, 2 and 3 respectively while q1, q2,q3 are the quantities that they sell in the market. Each firm has a cost function c(q)=2q.
(a) Find the prices that each firm chooses in a Bertrand equilibrium
(b) Find the equilibrium quantity that each firm sells and profits earned
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