Question

Problem IX: Two identical rms (identical cost functions) operate on a market. For each of the following market demand curves and cost curves determine the Bertrand, Cournot, and Stackelberg outcomes (prices, quantities, and profits - for each firm, and at the market level). Also determine the collusive outcome (assuming the two firms form a cartel). Compare the outcomes.

a) P = 200 - 2Q, TC = 50 + 10Q (PB = 10;PC = 73:33;PS = 57:5;PM = 105)

b) P = 250 - Q, TC = 50Q (PB = 50;PC = 350=3;PS = 100;PM = 150)

c) P = 1200 -Q, TC = 25 + 40Q (PB = 40;PC = 426:67;PS = 330;PM = 620)

d) P = 160 - 2Q, TC = Q2 (PB = 160=3;PC = 80;PS = 1600=21;PM = 96)

the figuers in brackets are the answers but I want to know how to work the problem.

Answer 1