Suppose there are initially two identical firms that serve a market with constant marginal and average costs,

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Suppose there are initially two identical firms that serve a market with constant marginal and average costs, \(M C=A C=6\), per unit of output. Firm 1 gains a first-mover advantage from an opportunity to purchase an input at a lower cost than is available to Firm 2. This reduces Firm 1's constant marginal and average costs to

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Microeconomics

ISBN: 9781292215624

8th Global Edition

Authors: Jeffrey Perloff

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