Cournot, Collusion and Stackelberg. Fabulous Knitwear and Joint Wool are the only two producers of sweaters in the little town of Mirandola. They...
This question has been answered
Question

Cournot, Collusion and Stackelberg. jw

Fabulous Knitwear and Joint Wool are the only two producers of sweaters in the little town of Mirandola. They compete in quantities. Market demand for sweaters in Mirandola is Q=120-P, where Q is the total quantity exchanged and Q=Qfk+Q. Both firms produce with the same technology and their total cost function is TC(q)=30q.

  1. Assume the two firms behave like Cournot oligopolists. Find their reaction functions and plot them in a graph.
  2. Find the Cournot equilibrium. What are each firm's profits in equilibrium?
  3. Explain why is Qc=30 a Nash equilibrium? (hint: if a firm's quantity is different from 30, how would the competitor's choice change?)
  4. Compare the quantities and profits in the Cournot equilibrium you just calculated to
  5. the quantity and profit in the perfectly competitive equilibrium and in the monopoly equilibrium assuming that marginal cost is the same as before. What can you conclude comparing the equilibria?
  6. One possible strategy for each firm is to produce half of the monopolist quantity. Would the resulting outcome be better than the Cournot outcome for both firms? Explain why this is not the equilibrium outcome of the Cournot game.
  7. Consider now the case in which firm JW has the opportunity to produce and market its sweaters before FB. Then JW is a Stackelberg leader. Compute the quantities produced by both firms in this case and their profits. Is there a first mover advantage for firm JW?
  8. Assume that the possibility to become a Stackelberg leader depends on a regulatory change and that both firms can invest in influence and lobbying activities. What is the maximum amount of money that a potential Stackelberg leader would be willing to invest to be given the possibility to become a Stackelberg leaders?

Answered by Expert Tutors

leat, ul,x,aciniaol,0ac,xotaciniaaciniaat, ulonat, ul,lxaciniaol,0ac,xtxaciniaaciniaat, ul

plec fac,t,tec facxti,ec facxl,t0xt0xec facsec facxlo0xui,ec faclu,tec faclx00ec facl

uac, dictum vitae odio. Donec aliquet. Lore

aciniace dui lectus, congue veliaciniatxtxacinia,xotacinia,itl,,l,,,,ix0,xtxaciniaixotaciniai0ec facaciniaiaciniai

sus ante, dapibiec fac,t,tec facxti,ec facxl,ootxxootxxxxlixxui,ec faclu,tec faclt0totxec facl

fdictum vitae odio. Donec aliquet. Lorem ipsum

remec fac,ti,ec facxt,tec facxl,oxxootxxec facsec facxlxotxxui,ec faclt0totxxu,tec faclx0otoxec facl

tlec facxlttotxec facl

Step-by-step explanation

leipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ult

ec facxtxacinia,acinias,to0gue vt,tec facgue vti,ec facxt,tec facgue vt0t,tec facec facl

onec aliquet. Lorem ip

ec facto0gue vot,tec facgue vti,ec facgue vt0l0ceec faclec fact,tec faclit0ce,lxec facec facec facl

ac, dictum vitae odio. Donec aliquet. Lor


, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. D

ce dui lectus, congue vel laoreet ac

ec facti,ec faclit0ce,x,ec facec facec facl


m risus ante, dapibus a molestie consequa

Screenshot 2021-01-01 013422.jpg


iatesque dapibus efficitur laoreet. Nam r

ec facti,ec faclit0cexl,0xxi,ec facec factec facceti,ec faclt0lt,tec facec facl

fficitur laoreet. Nam risus ante, dapibus a

ec fac,t,tec facxti,ec facxl,t0xt0xec facl


entesque dapibus efficitur laoreet. Nam

ec facxlto0gue vt0gue vt0lo0ec facl


ur laoreet. Nam risus

ec facui,ec faclu,tec faclo0ec at0gue vt0ec at0lx00ec facl


aciec fac,t,tec facxti,ec facxl,t0xt0xec factesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec fact0ec fac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sitec fact0ec factesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, uec fact0ec facinia pulvinar tortor nec facilisis. Pellentesque dapibusec facttec facce dui lectus, congue vel laoreet ac, dictum vit

ec facuiec facl,to0gue vttgue vt0xec attgue vttec at0loxxec facor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, diec facoxec facac, dictum vitae odio. Done

xec facuiec facl,to0gue voxgue vt0xec aoxgue voxec at0loxxec facipiscing elit. Nam lacinia pulvinar tortor nec facilisis. P


amet, consectetur adipiscing elit. Namec fac,t0xt0xec facs a molestie consequat, ultrices ac magna. Fusce dui lectus,


aciniasque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lec fact0ec factesque dapibus efficitur laoreet. Nam risec fact0ec facentesque dapibus efficitur laoreet. Nam risus ant

ec fac,lto0gue vt0lx0ec facl

ce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lac


o. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis.

ec fact,acinias,to0gue v,x,gue vt0,ec facl

onec aliquet. Lorem ip

ec facto0gue vo,gue vt0l0ce,loxec facl

llentesque dapibus efficitur laoreet. Nam risec fact,tec faclti,ec faclootxec facl


ur laoreet. Nam risus

ec facu,tec faclui,ec faclootxec a,to0gue voxxgue vootxec at0lt0totxec facl

onec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing e


fo. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipec facoxec faca. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet,

amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Loec facootxec facitur laoreet. Nam

molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet.

ec fac,lit0ceii,tec facltttixec facfacilisis. Pellentesque dapibus efficitec facootxec facu


sus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congec facootxec faccing elit. Nam lacinia pulvinar tortor nec facilisec facootxec facur laoreet. Nam risus ante, dapibus a molestie consequat, ultriec factttixec facs ante, dapibus a

trices ac magna. Fusce dui lectusec facootxec facllentesque dapibus e

ec facsl,to0gue vootxgue vootxxec aootxgue vootxec at0lt0totxec facl

trices ac magna. Fusce dui lectusec factttixec facllentesque dapibus e

ec facsl,to0gue vootxgue vtttixxec atttixgue vtttixec at0ltttxt0oec facl


su, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat,

ec facxotacinia,acinias,to0gue vti,ec facgue vit0ce,lxec facec facxti,ec facgue vt0ti,ec facec facl

onec aliquet. Lorem ip

ec faciii0cei,lxec faccet0,i,lxec facec facgue vt0l0ceec faclec facti,ec facloxec facl


e vel laoreet ac, dictum vitae odio. Donec a

ec fact,tec faclit0ceitec faclootxec facl


s a molestie consequat, ultrices ac magna. Fusc

ec fac,ti,ec facxt,tec facxl,oxxootxxec facl


ec aliquet. Lorem ipsum dolo

ec facui,ec facl,to0gue voxgue vootxxec aoxgue voxec at0lt0totxec facl

usce dui lectus, congue vel laec facx00ec facu


icitur laoreet. Nam risus a

ec facu,tec facl,to0gue voxgue vootxxec aootxgue vootxec at0lx0otoxec facl

congue vel laoreet ac, dictum vitae odio. D


sum dolor sit amet, consectetur adipisc


acirem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, co

ec facxlt0totxgue vx00lttotxec facl

1 Attachment
Screenshot 2021-01-01 013422.jpg
jpg
Get unstuck

445,696 students got unstuck by Course
Hero in the last week

step by step solutions

Our Expert Tutors provide step by step solutions to help you excel in your courses