Two firms (firm 1 and firm 2) compete in a market for a homogenous good by setting
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Two firms (firm 1 and firm 2) compete in a market for a homogenous good by setting quantities. The demand is given by Q (p) = 2 - p. The firms have constant marginal cost c = 1.
1. Draw the two firms reaction function. Find the equilibrium quantities and calculate equilibrium profits.
2. Suppose now that there are n firms where n ≥ 2. Calculate equilibrium quantities and profits.
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For the two firms the profit function can be expressed as pQ cQ where pQ 2 Q from the demand functio...View the full answer
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Related Book For 
Industrial Organization Markets and Strategies
ISBN: 978-1107069978
2nd edition
Authors: Paul Belleflamme, Martin Peitz
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