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Unformatted text preview: P denote the market-clearing price and assume that inverse demand is given by P ( Q ) = a Q (assuming Q < a , else P = 0 ). Assume that the total cost of f rm i from producing quantity q i is C i ( q i ) = cq i . That is, there are no f xed costs and the marginal cost is constant at c , where we assume c < a . Following Cournot, suppose that the f rms choose their quantities simultaneously. What is the Nash equilibrium? What happens as n approaches in f nity? 3. Osborne 18.1 4. Osborne 30.1 1...
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- Spring '12