Unformatted text preview: fixed costs) and compete in a Cournot fashion. Suppose the demand functions and transport cost are the ones given below: p 1 = 100 - Q 1 , where p 1 and Q 1 are price and total output sold in country 1 respectively. p 2 = 100 - Q 2 , where p 2 and Q 2 are price and total output sold in country 2 respectively. J = 5 1) Calculate the profit maximizing levels of output at home and abroad for each firm. Calculate the market price in each country and total profits for each firm. 2) Are firms “dumping” their product in the foreign country’s market? Justify....
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This note was uploaded on 05/15/2008 for the course ECON 467 taught by Professor Muniagurria during the Summer '06 term at University of Wisconsin.
- Summer '06