Suppose that two rms compete in quantities (Cournot) in a market in which demand is described by: P = 130 ????

January 7, 2021/in Grade Tutors Science Help Online /by admin

Suppose that two rms compete in quantities (Cournot) in a market in which demand is described by:

P = 130 ???? Q . Each rm incurs no xed cost but has a marginal cost of 10.

(a) What is the one-period Nash equilibrium market price? What is the output and prot of each

rm in this equilibrium?

(b) What is the output of each rm if they collude to produce the monopoly output? What prot

does each rm earn with such collusion?

(c) Suppose that after the cartel is established, one rm decides to cheat on the collusion, assuming

that the other rm will continue to produce its half of the monopoly output. Given the deviating

rm’s assumption, how much will it produce?

2

(d) If the deviating rm’s assumption is correct, what will be the industry price and the deviating

rm’s prot in this case?

(e) Suppose that the market game is now repeated indenitely. What is the smallest discount factor

that can maintain the collusive agreement under the grim strategy?

(f) Suppose that the market game is now repeated indenitely. What is the smallest discount factor

that can maintain the collusive agreement under the tic for tac strategy?

How it works

Getting started with us is very simple and all you need is a couple of minutes. The process only takes four steps. That is, fill in the order form, monitor the progress of your paper, payment, Preview drafts, and download the completed work!

Place your order

The first step is to place your order by filling out our order form. For you to receive an outstanding unique paper you should give us as much possible information regarding your assignment. You can begin by providing us with the tutor’s instructions followed by your explanation on how you want the paper to be. Ensure to upload additional materials if any.

Proceed to Payment

Now continue to make your payment which is processed by a secure system. Please note that we only begin working on your paper once the payment is done.

Monitor the progress of your paper

Your account with us allows you to monitor the progress of your assignment directly from your writer. We have put communication systems that allow you to message your writer directly in regards to your paper. What is more, you can chat with our readily available customer representative any time you have a question or you need clarification on anything. Moreover, we send an email to you when your order is received and when it is completed.

Preview the completed draft

Once your order is completed, our system will send you an automated email for notification. We recommend that you take your time to read through the paper to ensure that it has fulfilled your requirements.

Download the paper.

If you fill that your paper is satisfactory and has met all your expectations, proceed to download. Ensure that you edit your personal information before submitting that paper to your professor.