4. Allow that the demand for sodas in Canada is, QP = = 600-200p (4) (a)...

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4. Allow that the demand for sodas in Canada is, QP = = 600-200p (4) (a) (10 points) Suppose there are only two competitors in the market: Pepsi and Coke, and consumers are completely indifferent between these two products. The cost of producing a soda is $0.50. What is the equilibrium price and quantity under Bertrand (price) and Cournot (quantity) competition. (b) (10 points) What effect would a third entrant in the market have on price and quantity under Bertrand competition? What effect would a third entrant in the market have on price and quantity under Cournot competition? 4. Allow that the demand for sodas in Canada is, QP = = 600-200p (4) (a) (10 points) Suppose there are only two competitors in the market: Pepsi and Coke, and consumers are completely indifferent between these two products. The cost of producing a soda is $0.50. What is the equilibrium price and quantity under Bertrand (price) and Cournot (quantity) competition. (b) (10 points) What effect would a third entrant in the market have on price and quantity under Bertrand competition? What effect would a third entrant in the market have on price and quantity under Cournot competition?

Answer rating: 100% (QA)

a Equilibrium Price and Quantity 1 Market Demand The demand function for soda in Canada is given by QD 600 200p 2 Bertrand Competition Price Competition Under Bertrand competition both firms Pepsi and ... View the full answer