(22 points) There are two (and only two) firms in the market for carrots: Grimhouse (G)...
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(22 points) There are two (and only two) firms in the market for carrots: Grimhouse (“G”) and Boltway ("B"). Due to superior farmland and technology, G has a cost advantage over B. Specifically, CG(qG) = 100 + 2qG and CB(9B) = 140 +7qß. The market demand curve is given by Q = 120 – 2P, where Q = qG+qв and P is the price of carrots. (a) Find the Cournot Equilibrium price, as well as the quantities and profits for each firm, and the consumer surplus. (b) Calculate the HHI for this market. (c) Is the HHI in this market higher or lower than the HHI of a duopoly in which the firms have equal market share? (d) Suppose instead that both firms have C(q) Cournot equilibrium: i. price? ii. consumer surplus? iii. individual firm profits? iv. industry profits? Explain how these changes fit together. = 120+4.5q. How would this change the (22 points) There are two (and only two) firms in the market for carrots: Grimhouse (“G”) and Boltway ("B"). Due to superior farmland and technology, G has a cost advantage over B. Specifically, CG(qG) = 100 + 2qG and CB(9B) = 140 +7qß. The market demand curve is given by Q = 120 – 2P, where Q = qG+qв and P is the price of carrots. (a) Find the Cournot Equilibrium price, as well as the quantities and profits for each firm, and the consumer surplus. (b) Calculate the HHI for this market. (c) Is the HHI in this market higher or lower than the HHI of a duopoly in which the firms have equal market share? (d) Suppose instead that both firms have C(q) Cournot equilibrium: i. price? ii. consumer surplus? iii. individual firm profits? iv. industry profits? Explain how these changes fit together. = 120+4.5q. How would this change the
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Related Book For
Essentials of Strategic Management
ISBN: 978-1260092271
1st edition
Authors: Martyn R Pitt, Dimitrios Koufopoulos
Posted Date:
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