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# COURNOT watch

1. assume duopolists face damnd curve of P=125-Q, where Q is total market demand. each firm has a marginal cost of 25.
1. find reaction for both firms
2. find cournot equilibrium quantities and price
3. find stackelberg '' ''
4. cartel equilibrium quantity and price ?
5. find bertrand '' ''
2. 1. find reaction function for both firms
Q(1) = 50 - 0.5Q(2)
Q(2) = 50 - 0.5Q(1)

2. find cournot equilibrium quantities and price
Q(1) = Q(2) = 100/3 so total Q = 200/3
Price = 175/3
Profit for each firm = 10,000/9

3. find stackelberg
Suppose firm 1 moves first which will have an advantage over another
Q(1) = 50 and Q(2) = 25 so total Q = 75
Price = 50
Profit firm 1 = 1250 Profit firm 2 = 625

4. cartel equilibrium quantity and price
They will produce 50 units in total (25 for each firm) Price = 75
Profit (in total) = 2500 (1250 for each firm)

5. find bertrand
If non-differentiation then firms will charge Price = MC which is 25 and they will earn zero economic profit.

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