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  3. in the duopoly market of textbooks, there are two

In the duopoly market of textbooks, there are two identical firms with the marginal cost...

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Accounting

  1. In the duopoly market of textbooks, there are two identical firms with the marginal cost of 5. The market customers include faculties and students, and faculties with the demand function as P1=150-5Q1 and students with demand function as P2=50-5Q2
    1. Assume the two firms merge, whats the equilibrium price and output in the market? What is the profits for each firm?
    2. If this new firm is granted the rights to perform the first-degree price discrimination. What would be the quantity and firms profit in the market?
    3. Assume two firms now are the only two firms in a duopoly market. Compare the equilibrium price, quantities, and profits for both firms under Cournot and Stackelberg models (where firm 2 is the leader). Explain why the outcomes are different between the two models.

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