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The market for a standard-sized cardboard container consists of two firms: CompositeBox and Fiberboard.
The market for a standard-sized cardboard container consists of two firms: CompositeBox and Fiberboard. As the manager of CompositeBox, you enjoy a patented technology that permits your company to produce boxes faster and at a lower cost than Fiberboard. You use this advantage to be the first to choose its profit-maximizing output level in the market. The inverse demand function for boxes isP= 1200 – 6Q,CompositeBox’s costs areCC(QC) = 60QC, and Fiberboard’s costs areCF(QF) = 120QF.
Ignoring antitrust considerations, by how much would your profits increase if you merged with Fiberboard?
What is the minimum amount you would have to offer Fiberboard for it to accept your purchase offer?
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