Suppose that there were three identical firms instead of only two under the cost and market demand conditions out-lined in Section 13.2. What would be the Cournot equilibrium in terms of each firm’s output as well as the total market out-put? If there were four identical firms sharing the market?
Answer to relevant QuestionsIn a two-firm Stackelberg model of oligopoly, can both firms be “leaders”? Explain why or why not.Construct a payoff matrix to examine the determination of outputs in the Cournot duopoly model. What type of equilibrium exists for this model? Does the game- theoretic approach make this model any more plausible?In multi-division corporations where division heads are allocated an annual budget, explain why the “use-it-or-lose-it” “use-it-or-lose-it” phenomenon occurs and is a reflection of a prisoner’s dilemma.Explain why a certain triangular area is a measure of the deadweight loss of monopoly. What information do you require in order to calculate the size of this triangle? If the latest computer chip produced by Intel has twice the storage capacity as the previous-generation chip, Intel would find it advantageous to market the new chip even though its sales of the old chip would plummet. True ...
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