(Assume rms compete over quantity) Two identical rms are serving a market in which the inverse demand function is given by P = 400-2Q (P = 400-2(q1+q2)).
The marginal costs of each firm are $40 per unit.
(a) Now suppose bothfirms falsely believe they are the first mover when they are actually producing at the same time (This would be like Toyota and Ford secretly producing automobiles early with the intent to release their numbers before the other starts production. However, when they go to announce how many they have made before the other, each finds out that both firms produced at the same time).
Solve for (each firms quantity, total quantity, price, each firms profit, and total profit) for i= {1,2}