A country's competition regulator decides to allow the merger of the only two firms in a market

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A country's competition regulator decides to allow the merger of the only two firms in a market reasoning that, while there would be a lessening of competition, the potential efficiency gains would position the combined company so that it can deal with the threat of multinationals and compete internationally. The inverse market demand curve is \(p=30-2 Q\), where \(Q=q_{1}+q_{2}\). Each firm has a constant marginal and average cost of 6 per unit. What are the Nash-Cournot equilibrium quantities, price, profits, consumer surplus, and deadweight loss? If the firms merge, how do the equilibrium values change? 

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Microeconomics

ISBN: 9781292215624

8th Global Edition

Authors: Jeffrey Perloff

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