Assumptions Market Demand: P-14- Que Duopoly: P-14-%(91 +92) Marginal Cost: MC-4 Two P-16-Q Groups: P-12- (HD...

  

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Assumptions Market Demand: P-14- Que Duopoly: P-14-%(91 +92) Marginal Cost: MC-4 Two P-16-Q Groups: P-12- (HD high demand, LD-low demand] Capacity Constraint: 5/firm Incumbent/Entrant: P-14-Qr-ac Entrant's Total Cost-9+4q Cournot Duopoly 1. Take derivative of demand function in terms of qi (dqi/dP). - MRI. 2. Set MR1MC. That's Firm 1's reaction function. 3. Repeat for Firm 2. 4. Where the reaction functions cross is the Nash/Cournot Equilibrium. Therefore, plug q2's reaction function into q₁. 5. Solve for both quantities. 6. Add q₁ + q2 = Quotal 7. Use Qatal to find price. Assumptions Market Demand: P-14- Que Duopoly: P-14-%(91 +92) Marginal Cost: MC-4 Two P-16-Q Groups: P-12- (HD high demand, LD-low demand] Capacity Constraint: 5/firm Incumbent/Entrant: P-14-Qr-ac Entrant's Total Cost-9+4q Cournot Duopoly 1. Take derivative of demand function in terms of qi (dqi/dP). - MRI. 2. Set MR1MC. That's Firm 1's reaction function. 3. Repeat for Firm 2. 4. Where the reaction functions cross is the Nash/Cournot Equilibrium. Therefore, plug q2's reaction function into q₁. 5. Solve for both quantities. 6. Add q₁ + q2 = Quotal 7. Use Qatal to find price.

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1 The market demand function is P 14 Q Take the derivati... View the full answer