# There are two major producers of corncob pipes in the world. Suppose that the inverse demand function

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## Question:

There are two major producers of corncob pipes in the world. Suppose that the inverse demand function for corncob pipes is described by p = 120 - 4g where g is total industry output and suppose that marginal costs are zero.

(i)What is the Cournot reaction function of firm 1 to the output, g of firm 2?

(ii) What is the Cournot reaction function of firm 2 to the output q, of firm 1?

(iii) What is the Cournot-Nash equilibrium?

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## An Introduction to Management Science Quantitative Approach to Decision Making

ISBN: 978-1337406529

15th edition

Authors: David R. Anderson, Dennis J. Sweeney, Thomas A. Williams, Jeffrey D. Camm, James J. Cochran