Consider a linear cournot duopoly with inverse demand curve, Ask an Expert

Economics

Consider a linear Cournot duopoly with inverse demand curve p = a - Q where Q is market quantity. Suppose firm 1's marginal cost is c_1 = 1, and firm 2's marginal cost is c_2 = 2 (and a > 4).

(a) Find the Nash equilibrium in pure strategies.
(b) What does iterative strict dominance say about the game?
(c) What happens in Nash equilibrium if a = 3 ?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M966325

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