Discussion:
Koak and Pepsee are the only producers of soft drinks: TCk = 100 + 5q & TCp=100+10q The market demand for soft drinks is: Q = 1000 - 10P.
a) If the firms behave as Cournot competitors, find the Nash equilibrium price, output per firm, and profit per firm.
b) If the firms behave as Stackelberg competitors, with Koak the leader, find the Nash equilibrium price, output per firm, and profit per firm.
c) If the firms collude to maximize their combined profit, find the price, output per firm, and profit per firm assuming they split the profits evenly.