Consider a Cournot duopoly in a market with inverse demandp(q) = 100-q where q is the total…
Consider a Cournot duopoly in a market with inverse demandp(q) = 100-q where q is the total quantity produced by the two firms.The cost function of firm 1 is c1(q1) = (q1)^2and that of firm 2 is c2(q2) = 12q2:Does each firm has a strictly dominated action/quantity? If so, given an example. Find the best response function of each firm. Find the Nash equilibrium. If the two firms enter a joint operating agreement where they set quantities to maximizes their total profits, what will be the new quantities?2. A city has two newspapers,De-mand for each paper depends on its own price and the price of its rival. Demand for papers A and B;measured in thousands of subscriptions are 21-2pA+pBand21-2pB+pA;respectively, where pA is the price of paperA and pB is the price of paperB:The marginal cost of printing and distributing an extra copy of a paper just equals the extra advertising revenue one gets from another reader so each paper treats marginalcosts as zero.Find the best response function of each firm. Find the Nash equilibrium prices. If the papers enter a joint operating agreement where they set prices to maximizes theirtotal profits, what will be the new prices?
