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Consider a market with 3 identical firms with costs, C(qi) = 10 + 2qi , facing...

Consider a market with 3 identical firms with costs,

C(qi) = 10 + 2qi ,

facing market demand,

Qd(P) = 100 − 2P.

(a) Solve for the best-response function for a firm (identical for all 3 firms).

(b) Solve for the Cournot equilibrium quantities, price, profits, and deadweight loss.

(c) What discount rate, r, could sustain a collusive, price-fixing agreement where the firms share the monopolized profits for an infinite or uncertain time horizon?

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