Suppose that the market demand for a certain product is given by P = 670 – Q. where Qis total industry output. There are only three firms F, F2, F3 that manufacture that product. The three firms have the following marginal costs: c = 32, c2 = 34 and z = 36. The leader (F;) makes a production decision q1. F, after observing the quantity chosen by F¡ chooses its own quantity q2. Finally Fg, after observing the quantities chosen by F; and F, chooses its own quantity q3. a) Determine the output levels that will be produced in a Stackelberg -Nash equilibrium q1 = 92= 93 = b) Determine the price level in such an equilibrium P= c) Determine the profit levels in such an equilibrium U1 =

Suppose that the market demand for a certain product is given by P = 670 – Q. where Qis total industry output. There are only three firms F, F2, F3 that manufacture that product. The three firms have the following marginal costs: c = 32, c2 = 34 and z = 36. The leader (F;) makes a production decision q1. F, after observing the quantity chosen by F¡ chooses its own quantity q2. Finally Fg, after observing the quantities chosen by F; and F, chooses its own quantity q3. a) Determine the output levels that will be produced in a Stackelberg -Nash equilibrium q1 = 92= 93 = b) Determine the price level in such an equilibrium P= c) Determine the profit levels in such an equilibrium U1 =

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.1P: A firm in a perfectly competitive industry has patented a newprocess for making widgets. The new...

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