Firms A and B both operate under duopolistic competition with constant marginal costs of 2. The...
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Firms A and B both operate under duopolistic competition with constant marginal costs of 2. The demand function of the market is Q = 300 - 25P. a. b. C. Assume first that firm A and B are aware of their mutual costs. Determine price and quantity for each firm. (40%) Assume now that A moves first and B can observe A's marginal costs, but A cannot observe B's marginal cost. Determine price and quantities produced by both firms. (40%) Is there a first mover advantage in the former game? Justify your answer. (20%) Firms A and B both operate under duopolistic competition with constant marginal costs of 2. The demand function of the market is Q = 300 - 25P. a. b. C. Assume first that firm A and B are aware of their mutual costs. Determine price and quantity for each firm. (40%) Assume now that A moves first and B can observe A's marginal costs, but A cannot observe B's marginal cost. Determine price and quantities produced by both firms. (40%) Is there a first mover advantage in the former game? Justify your answer. (20%)
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