Walmart (firm 1) and Amazon (firm 2) are a duopoly in the grocery market. They are...

 

Transcribed Image Text:

Walmart (firm 1) and Amazon (firm 2) are a duopoly in the grocery market. They are faced with an inverse demand of P(Q1, Q₂) = 4 − 2(Q₁ + Q₂) and total costs of TC(Q;) = 2Q², i = 1,2. Note that the marginal cost is not constant! 2.1. Obtain the Cournot equilibrium quantities and profits. 2.12 Obtain the Stackelberg equilibrium in which Walmart moves first. Compare with the Cournot equilibrium. 2.3. Obtain the cartel outcome. Compare with Stackelberg and Cournot. Walmart (firm 1) and Amazon (firm 2) are a duopoly in the grocery market. They are faced with an inverse demand of P(Q1, Q₂) = 4 − 2(Q₁ + Q₂) and total costs of TC(Q;) = 2Q², i = 1,2. Note that the marginal cost is not constant! 2.1. Obtain the Cournot equilibrium quantities and profits. 2.12 Obtain the Stackelberg equilibrium in which Walmart moves first. Compare with the Cournot equilibrium. 2.3. Obtain the cartel outcome. Compare with Stackelberg and Cournot.

Answer rating: 100% (QA)

To obtain the Cournot equilibrium quantities and profits we need to solve for the quantities each firm will produce given the inverse demand function ... View the full answer