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OneShotCournotCartel

# OneShotCournotCartel - To try different demand functions...

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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
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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....
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