Two firms compete in a Cournot type duopoly. The industry demand is given by P-100-20. Each...

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Two firms compete in a Cournot type duopoly. The industry demand is given by P-100-20. Each firm has a constant marginal and average cost of $60. a. What is the current equilibrium price and quantity in the industry? b. Suppose that one firm discovers a procedure that lowers its average marginal cost to $50. i. If the innovator does not license its product but simply competes as the low-cost firm in a Cournot duopoly, what will be the innovator's profit? ii. What will be the innovator's profit if it licenses its technology to its competitive at a royalty rate of $10? Two firms compete in a Cournot type duopoly. The industry demand is given by P-100-20. Each firm has a constant marginal and average cost of $60. a. What is the current equilibrium price and quantity in the industry? b. Suppose that one firm discovers a procedure that lowers its average marginal cost to $50. i. If the innovator does not license its product but simply competes as the low-cost firm in a Cournot duopoly, what will be the innovator's profit? ii. What will be the innovator's profit if it licenses its technology to its competitive at a royalty rate of $10?

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a The equilibrium price and quantity in the Cournot duopoly will be determined by the intersection o... View the full answer