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Unformatted text preview: 1 and Q 2 . c. Suppose (as in the Cournot model) that each firm chooses its profit-maximizing level of output on the assumption that its competitors output is fixed. Find each firms reaction curve (i.e., the rule that gives its desired output in terms of its competitors output). d. Calculate the Cournot equilibrium (i.e., the values of Q 1 and Q 2 for which both firms are doing as well as they can given their competitors output). What are the resulting market price and profits of each firm?...
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This note was uploaded on 12/28/2009 for the course ECON 120 taught by Professor Walsh during the Fall '09 term at University of Illinois, Urbana Champaign.
- Fall '09