Consider an oligopolistic market with N = 3 identical firms, all three making a homogeneous product....
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Consider an oligopolistic market with N = 3 identical firms, all three making a homogeneous product. The inverse demand for this product is p = 200-3Q where Q is the market quantity. The marginal cost of production is equal to the average cost and is identical for all firms and given by c = 100. (a) Calculate the Nash equilibrium output, price and profits of each firm using quantity as the strategic variable (i.e. assuming firms choose quantities). (b) Compute the Lerner index for each firm. (c) Calculate the Nash equilibrium output, price and profits of each firm using price as the strategic variable. What is the Lerner index under this equilibrium? Consider an oligopolistic market with N = 3 identical firms, all three making a homogeneous product. The inverse demand for this product is p = 200-3Q where Q is the market quantity. The marginal cost of production is equal to the average cost and is identical for all firms and given by c = 100. (a) Calculate the Nash equilibrium output, price and profits of each firm using quantity as the strategic variable (i.e. assuming firms choose quantities). (b) Compute the Lerner index for each firm. (c) Calculate the Nash equilibrium output, price and profits of each firm using price as the strategic variable. What is the Lerner index under this equilibrium?
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a If firms choose quantities as the strategic variable the Nash equilibrium output pric... View the full answer
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Auditing a business risk appraoch
ISBN: 978-0324375589
6th Edition
Authors: larry e. rittenberg, bradley j. schwieger, karla m. johnston
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