Suppose the airline industry consisted of only two? firms

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Suppose the airline industry consisted of only two? firms: American and Texas Air Corp. Let the two firms have identical cost? functions, C(q)=40q, Assume that the demand curve for the industry is given by P=160-Q, and that each firm expects the other to behave as a Cournot competitor.

How much should American be willing to spend to reduce its marginal cost to 25, assuming that Texas Air will have marginal costs of 25 regardless of? American's actions?

Reference no: EM132407293

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