OneShotCournotCartel

OneShotCournotCartel - To try different demand functions...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
A Cournot-Nash Cartel Demand function P = A - B.Q Marginal Cost = 30 A= 150 B = 1 Output Equilibrium (thousands) Output Strategy for Firm 2 Cooperate Defect Output Strategy Cooperate 30 30 30 45 for Firm 1 Defect 45 30 40 40 Profit Equilibrium ($'000) Output Strategy for Firm 2 Cooperate Defect Output Strategy Cooperate 1800 1800 1350 2025 for Firm 1 Defect 2025 1350 1600 1600 Probability Adjusted Discount Factor to Sustain the Cartel = 0.5294118
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: To try different demand functions change cells C4 and/or E4 To try different cost functions change cell F3 This example considers how a Cournot duopoly might sustain a cartel given that the two firms expect their interaction to last indefinitely. Experiment with different cost and demand functions to see what happens to the critical discount factor....
View Full Document

This note was uploaded on 12/27/2011 for the course ECON 468 taught by Professor Jean-francoishoude during the Fall '10 term at Wisconsin Milwaukee.

Ask a homework question - tutors are online