A industry consists of two firms with identical costs cq


An industry consists of two firms with identical costs C(q) = 5q +q2=2. The firms can either collude or compete. If both collude, they each produce qm (half the monopoly output Qm). If one rm colludes and the other competes, the latter produces the output q? that maximizes its prots given that the other firm produces qm. If both compete, they play Cournot and each produce qn. Calculate these outputs and the resulting prots if market demand is Q = 125 ?? p. Represent your results as a normal-form game. What is the Nash equilibrium if the game is only played once?

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Econometrics: A industry consists of two firms with identical costs cq
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