The firms compete with the cournot model

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Reference no: EM131392441

Based on the following information: A and B. Their cost functions are defined below, respectively: CA = 10000 + 10QA + 0.5QA2 and CB = 12000 + 10QB + 0.5QB2. The firms face the following market demand curve: P = 610 – Q, (where Q = QA + QB).

If the firms compete with price (Bertrand model), they can earn profits (πA, πB), allowing rounding errors:

a. (12500, 10500).

b. (15250, 13250).

c. (8000, 6000).

d. (10000, 8000).

If the firms compete with the Cournot model, they can earn profits (πA, πB), allowing rounding errors:

a. (23750, 21750).

b. (22734.375, 20734.375).

c. (33571, 31571).

d. (26250, 24250).

Firm A is the first mover. If firms compete with the Stackelburg model, they can earn profits (πA, πB), allowing rounding errors:

a. (23250.25, 18250.25).

b. (24285.12, 18612.04).

c. (26250, 24250).

d. (23571.5, 21831.6).

If the firms operate as a centralized cartel, they can earn profits (πA, πB), allowing rounding errors:

a. (28000, 26000).

b. (27000, 25000).

c. (26000, 24000).

d. (25000, 23000).

Reference no: EM131392441

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