Question: The inverse market demand in a homogeneous product Cournot duopoly

The inverse market demand in a homogeneous- product Cournot duopoly is P = 200 – 3(Q1 + Q2) and costs are C1(Q1) = 26Q1 and C2( Q2) = 32Q2.
a. Determine the reaction function for each firm.
b. Calculate each firm’s equilibrium output.
c. Calculate the equilibrium market price.
d. Calculate the profit each firm earns in equilibrium.

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  • CreatedApril 18, 2014
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