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Calculation of Cournot - Nash equilibrium and Stackleberg Equilibrium.

Assume two identical firms produce widgets and they are the only firms in the marketplace. Their costs are given by C1 = 5 (Q1) and C2 = 5 (Q2) respectively, where Q1 is the output of firm one and Q2 is the output of firm 2. Price is determined by the following demand curve: (MC for each firm is 5)

P = 100-Q, where Q = Q1 + Q2 .

(a) Find the Cournot-Nash equilibrium.

(b) Find the Stackleberg Equilibrium.

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M917901

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