Problem regarding the dynamic adjustment equations

Assignment Help Mechanical Engineering

Reference no: EM13948402

Consider the following three- rm oligopoly model

p =20 -Q

Q =q1 +q2 +q3 TC1 =2q1

TC2 =2q2

TC3 =2q3

(i) What is the Cournot solution?

(ii) Firm i chooses qi(t) to maximise 1ri(t), assuming qj(t)=qj(t -1) for all j =l= i. What are the dynamic adjustment equations?

(iii) Show that no matter which rm is the monopolist in period 0, the system moves to one of oscillations in which the Cournot solution is never reached.

Reference no: EM13948402

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