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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- Summer '06
- Economics, transport cost, Reciprocal Dumping Problem, reciprocal dumping model