Please help me understand part d to part h Q1. Horizontal Mergers with synergiesThe market inverse demand is given by P(Q) = 170 - Q. Initially, fourfirms, 1, 2, 3, and 4, have the symmetric constant marginal cost c = 20and compete à la Cournot. There is no fixed cost. We will explore theimpact of a merger between firms 1 and 2. The newly merged firm iscalled m. Following the merger, firm m's constant marginal cost reducesto Cm 20 z with 0 < x < 20 representing the synergy resulting fromthe merger.First, consider the market equilibrium prior to the merger.a.b.C.d.e.Next, consider the market equilibrium after the merger. Note that onlyfirms m, 3, and 4 are still operating in the market.f.g.Write down the profit maximization for firm i, i = 1, 2, 3, 4.Write down the first-order condition for firm i.h.Solve for the symmetric Nash equilibrium in this Cournotgame. In particular, write down each firm's output qre, price pretotal output Qre, and each firm's profit pre in equilibrium.Calculate the pre-merger total welfare WpreWrite down the profit maximization problems for firmsm, 3, and 4 respectively.Write down the first-order conditions for firms m, 3, and4 respectively.Solve for the asymmetric Nash equilibrium in this post-merger Cournot game. In particular, write down firm m's outputqnost, firms 3 and 4's symmetric output post = dost = dost, and totaloutput postCalculate the post-merger total welfare Wpre.

Oligopoly is a market structure in which there are only a few very large businesses. These…

Next, consider the market equilibrium after the merger. Note that only firms m, 3, and 4 are still operating in the market. e. f. h. Write down the profit maximization problems for firms m, 3, and 4 respectively. Write down the first-order conditions for firms m, 3, and 4 respectively. Solve for the asymmetric Nash equilibrium in this post- merger Cournot game. In particular, write down firm m's output qpost, firms 3 and 4's symmetric output quost = '3ost = quos post and total 1 I'm output Qost Calculate the post-merger total welfare Wpre

Next, consider the market equilibrium after the merger. Note that only firms m, 3, and 4 are still operating in the market. e. f. h. Write down the profit maximization problems for firms m, 3, and 4 respectively. Write down the first-order conditions for firms m, 3, and 4 respectively. Solve for the asymmetric Nash equilibrium in this post- merger Cournot game. In particular, write down firm m's output qpost, firms 3 and 4's symmetric output quost = '3ost = quos post and total 1 I'm output Qost Calculate the post-merger total welfare Wpre

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.6P

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