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The following question deals with competition among the few.

a. What would be the eventual equilibrium output for each of two competitors under the Cournot-Stackelberg Reaction Model if the Market demand is Q=20-P? (Assume that MC = 0).

b. How would your answer to part (a) change if MC=10?

c. Extend the Cournot-Stackelberg reaction Model to three producers (rather than 2) who each (and in sequence) make an output decision assuming that the other two producers will not change their output. Use a market demand of Q=20-P and assume that each producer has MC=0. What will be the equilibrium quantity and price for each producer?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91235386

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