Question: Consider a homogeneous good duopoly with linear demand P(q) = 12- q,where q is the total industry output, and constant marginal costs c = 3.

Consider a homogeneous good duopoly with linear demand P(q) = 12- q,where q is the total industry output, and constant marginal costs c = 3.

1. Suppose that firms simultaneously set quantities. Determine the equilibrium (price, quantities, profit, welfare).

2. The firms consider to merge although their production costs are not affected. Determine the optimal price and quantity after merger.

3. Is such a merger profitable?

4. What are the welfare effects of such a merger?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Q:

1. KelseyCo is a specially sheet-metal manufacturing company that manufactures high-tech sheet-metal products for the electronics industry. All of their Brakes (sheet-metal bending equipment) are...

Q:

Exercise 4. Consider a homogeneous good duopoly with linear demand P (q) = 12-q, where q is the total industry output, and constant marginal costs C = 3. 1. Suppose that firms simultaneously set...

Q:

Homogeneous products, price competition, simultaneous moves, two firms Consider a market with the following (inverse) demand curve is: p = 40 - q where q is total industry output Assume the industry...

Q:

Explain the following questions in the attachment Consider a homogeneous good industry (such as an agricultural product) with just two firms and a total market demand Q = 400-P, so the inverse demand...

Q:

Give correct solutions. It is estimated that 16% of the cost of goods sold represents fixed factory overhead costs and that 22% of the operating expenses are fixed. Since Royal Cola is only one of...

Q:

!Macroeconomic expert please.. Consider a homogeneous good industry (such as an agricultural product) with just two firms and a total market demand Q = 400-P, so the inverse demand is P = 400 - Q....

Q:

Explain these questions Consider a homogeneous good industry (such as an agricultural product) with just two firms and a total market demand Q = 400-P, so the inverse demand is P = 400 - Q. Suppose...

Q:

Five star rating for only correct answers. (a) For the following stage game, check whether the strategy profile given (below) is a subgame- perfect equilibrium of the game in which the stage game is...

Q:

Estimating Hugo Boss's Equity Value Hugo Boss AG is a German designer, manufacturer, and distributer of men's and women's clothing, operating in the higher end of the clothing retail industry. During...

Q:

1. Tami starts her new job and wants to build a new wardrobe. Her utility for pants and shirts is estimated by the equation U = P0.7.S0.3, where U is her total utility from consuming pants and...

Q:

Help me kindly please... 2. Consider a homogeneous good industry (such as an agricultural product) with just two firms and a total market demand Q = 400 - P, so the inverse demand is P = 400 - Q....

Q:

A ship sails 30 kilometers 80 degrees north of east. It then turns 40 degrees to the west, giving it a new heading of 60 degrees north of west. After sailing another 10 kilometers, how far is the...

Q:

On January 1, 2014, Kessler Inc. had these stockholders? equity balances. Common Stock, $1 par (2,000,000 shares authorized, 600,000 shares issued and outstanding) $600,000 Paid-in Capital in Excess...

Q:

Let f ( x ) = 8 * c o s ( 1 0 * x - 9 ) 5 + 1 4 . The range o f f i s ?

Q:

The procedure BUILD-MAX-HEAP in Section 6.3 can be implemented by repeatedly using MAX-HEAP-INSERT to insert the elements into the heap. Consider the following implementation: BUILD-MAX-HEAP'(A) 1...

Q:

Cost of goods manufactured. Consider the following account balances (in thousands) for the Canseco Company: If you want to use Excel to solve this problem, go to the Excel lab at...

Q:

In analyzing the performance of a thermal system, the engineer must be able to identify the relevant heat transfer processes. Only then can the system behavior be properly quantified. For the...

Q:

Analyzing the Effects of Errors on Financial Statement Items Cohen & Boyd, Inc., publishers of movie and song trivia books, made the following errors in adjusting the accounts at year-end (December...

Q:

Comparative balance sheets for Eddie Murphy Company are presented below. Additional information:1. Net income for 2010 was $125,000.2. Cash dividends of $60,000 were declared and paid.3. Bonds...

Q:

Write a program to wish happy birthday to a student. Firstly, take today month and day as an input and secondly take birthday as an input in the form of month and day. If the input day and month...

Q:

1. To provide an understanding of how emotions are regulated by the development of relationships between actors in a communication situation.

Q:

Positive effect on trusting others, and also improvements in the final results.

Q:

1. Discuss the following statements: a) Local links generate collective behaviours. b) An unfamiliar system will be described as chaotic by the ignorant. c) When we see that something is happening,...