Consider a duopoly competition for which the inverse demand function and the cost functions of the duopolists are given below:
π(π) = 120 β π, where π = π1 + π2
πΆ1(π1) = 20π1
πΆ2(π2) = 0.25π22
a) Compute the reaction functions for each firm. Represent them graphically.
b) Find the equilibrium strategies, the total output, and the equilibrium market price.
c) Compute the marginal revenue at the equilibrium point and the maximum profit of each firm.Β
Comments
Leave a comment