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QUESTION
Two identical firms face linear demand. Market demand is given by P=30-Q. Suppose both firms face zero marginal costs a) Solve for Cournot...
Two identical firms face linear demand. Market demand is given by P=30-Q. Suppose both firms face zero marginal costs
a) Solve for Cournot equilibrium prices and outputs.
b) Solve for Stakelberg equilibrium prices and outputs.
c) Compare graphically consumer and producer surplus in Cournot and Stakelberg equilibria to perfect competition.
