Let's consider a market in which two firms compete as quantity setters, and the market demand curve

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Let's consider a market in which two firms compete as quantity setters, and the market demand curve is given by Q = 4000 - 40P. Firm 1 has a constant marginal cost equal to MC1 = 20, while Firm 2 has a constant marginal cost equal to MC2 = 40.
a) Find each firm's reaction function.
b) Find the Cournot equilibrium quantities and the Cournot equilibrium price.
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Microeconomics

ISBN: 978-0073375854

2nd edition

Authors: Douglas Bernheim, Michael Whinston

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