cournot equilibrium, Managerial Economics

Assignment Help:

Air Canada and KLM compete for customers on flights among Amsterdam and Toronto. The total number of passengers (Q) flown by these two firms is the sum of passengers who fly KLM, Qk and those who fly Air Canada, Qc. Suppose that no other companies can enter the route Due to they cannot obtain landing rights at both airports. Market demand is given by:

2302_aa.png

where p is the cost of a one-way flight (in Euros), and Q is claculated in thousands of passengers flying one-way per quarter. Every airline has a constant marginal and average cost of €147 per passenger per flight.

 

a) Determine the Cournot equilibrium.

b)  Assume both airlines receive a subsidy of €54 per passenger. Derive the new Cournot equilibrium. What is the effect of the subsidy? How much of the subsidy is passed on to the passengers?

 

 


Related Discussions:- cournot equilibrium

Determination of optimum output and price level, The optimum output and pri...

The optimum output and price level is always determined with the concepts of revenue and costs-the difference in joint or independent production will show in the differences in cos

Using the national output for calculating national income, Using the Nation...

Using the National Output for Calculating National Income A final method which is more direct is the "output method" or the value added approach .  This involves adding up

Full-service department, Like supermarkets, full-service department stores ...

Like supermarkets, full-service department stores like Macy's are mainly in decline. What factors may these types of stores have in common behind their declines? How would you veri

Describe the optimisation of managerial economics, Describe the Optimisatio...

Describe the Optimisation of managerial economics Optimisation techniques are perhaps the most vital to managerial decision making. Given that alternative courses of action are

Pilgrim Bank Case, Your discussion assignment this week is associated with ...

Your discussion assignment this week is associated with the Pilgrim Bank case. Using the attached file, answer the following questions: A. Is there a difference in profitability ac

Contributions of economic theory to business economics, Contributions of ec...

Contributions of economic theory to business economics According to Baumol, there are 3 key contributions of economic theory to business economics. 1.  Practice of building

Income elasticity and cross price elasticity, Question: (a) As an advis...

Question: (a) As an advisor to government as well as that to a firm how will you make use of your knowledge on price elasticity of demand, income elasticity and cross price ela

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd