What are the profit-maximizing quantities and prices

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Reference no: EM131204427

Consider two firms, i = 1; 2, producing differentiated products and engaged in Cournot

a. Given the market demands, what are the best-response functions of the two firms?

b. Draw the best-response functions both for complements (d < 0) and substitutes (d > 0).

c. Compute the Cournot equilibrium quantities and prices in this market.

d. Compare the outcome between substitutes and complements goods.

e. What are the profit-maximizing quantities and prices if firm i is a monopolist in this market? Compare with part c.

Reference no: EM131204427

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