Consider the Cournot competition between two firms with different marginal costs. For firm 1, let the cost function be: C1(q1)-3*q1 For firm 2, let the cost function be: C2(q2)-6*q2 The inverse demand function is: P(Q)-12-Q. where Q-q1+q2 In this game, write down the profit functions for firm1 and firm 2 (as functions of q1 and q2). Then, find the Nash equilibrium quantitie for firm 1 and firm 2. In the NE, which firm produces more: the one with the low or the high marginal cost?

Consider the Cournot competition between two firms with different marginal costs. For firm 1, let the cost function be: C1(q1)-3q1 For firm 2, let the cost function be: C2(q2)-6q2 The inverse demand function is: P(Q)-12-Q. where Q-q1+q2 In this game, write down the profit functions for firm1 and firm 2 (as functions of q1 and q2). Then, find the Nash equilibrium quantitie for firm 1 and firm 2. In the NE, which firm produces more: the one with the low or the high marginal cost?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.3P

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