Question: Consider the model p = 15 2Q Q = q1 + q2 + q3 TC1 = 5q1 TC2 = 3q2 TC3 = 2q3 (i)

Consider the model p = 15 − 2Q Q = q1 + q2 + q3 TC1 = 5q1 TC2 = 3q2 TC3 = 2q3

(i) Establish the Cournot solution.

(ii) Plot trajectories from initial points where each firm is a monopolist.

(iii) Under the assumption that each firm maximises its profits under the conjectural variation that the other firms are holding their output levels constant, solve the system’s difference equations.

(iv) Is the system dynamically stable?

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