Answer:
Explanation:
We need to find the function of firm 1 and firm 2 which we have as
PQ1/Q1= 300
600Q1– 3Q21 – 3Q1Q2/ = 300
300 – 6Q1 – 3Q2= 300
Q1 = 1/6(600 -300 – 3Q2)
Q1 = 50 – 1/2Q2 Reaction function for firm 1
Q2 = 50 – 1/2Q1 Reaction function for firm 2
Cournot which we have as;
Q2 = = 1/6(600 -300 – 3Q1)
Q2 = 50 – 1/2Q1
Q2 = 50 – ½(50 – 1/2Q1)
Q2 = 50 – 25 + 1/4Q1
Q1 = 100/3 = 33.33 Output
Q2= 100/3 = 33.33 Output
Equilibrium market price which is
P = 600 – 3(Q2+ Q2)600 – 3(100/3 + 100/3)= 400
Profits for firm 1
Π1 = TR1– C1= PQ1 – C1=400 * 100/3 – 300 * 100/3= 10000/3 = $3,333.33 For firm 1
Profits for firm 2
Π2 = TR2– C2= PQ2 – C2=400 * 100/3 – 300 * 100/3= 10000/3 = $3,333.33 For firm 2
Stackelberg is given as ;
QL= (600 – 300)/2*3 = 50 Firm 1 output is QL = 50
QF= (600 – 300)/4*3 = 25 Firm 2 output is QF =25 P = 600 – 3*75 = 375
Π1 = (375-300) * 50 = 3750Profit for firm 1
Π2 = 75*25 = 1875 Profit for firm 2
Bertrand is given as ;
Under this competition, price is the same to marginal cost and profits are zero
600 – 3Q = 300
Q = 100 Output = 100
P = Zero
Collusive Behavior is given as;
MR=MC600 - 6Q = 300
300 = 6QQ = 50 Output
P = 600 – 3*50 = 450
Π = (450 – 300) * 50 = 7,500profit
