Two cournot competitors nick limitedorm 1 and junior llcorm, Ask an Expert

Economics

Two Cournot competitors, Nick Limited(O¨rm 1) and Junior LLC(O¨rm 2), face an inverse demand curve p = 400 2q in the market (q = q1 + q2). Both producers have a marginal cost of $10 per unit.

(a) What is the reaction function for Nick Limited?

(b) How many units will each O¨rm produce? What will be the price in the market?

(c) What if Nick Limited chooses O¨rst (Leader) and Junior LLC follows (Follower). How many units will each O¨rm produce?

(d) Will the consumers be better or worse o§ in Stackleberg compared to the Cournot competition?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91676064

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