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Two firms, a and b, compete in a market to sell homogeneous products with inverse demand...

Two firms, a and b, compete in a market to sell homogeneous products with inverse demand function P = 400 – 2Q where Q = Qa + Qb. Firm a has the cost function Ca = 100 + 15Qa and firm b has the cost function Cb = 100 + 15Qb. Use this information to compare the output levels, price and profits in settings characterized by the following markets:

  1. Cournot
  2. Stackelberg
  3. Bertrand
  4. Collusion
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