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What is the equilibrium price

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The industry X is a duopoly. Firm 1 and Firm 2 compete through quantity-setting competition. The industry demand is P = 120 - Q, where Q is the total output of the two firms. Each firm's MC = $60 and no fixed costs.

(a) What is the equilibrium price, quantity, and profit for each firm?

(b) Firm 1 is considering a proprietary technology with a one-time sunk cost of $200. Once the investment is made, its MC will be $40. Firm 2 has no access to the technology and its MC will remain at $60. Should Firm 1 invest in the new technology?

Reference no: EM133079314

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