Consider a market that only includes two large firms

Economics Dec 12, 2020

Consider a market that only includes two large firms. The (inverse) market demand is P = 100 - Q. Firm 1 has a cost function of C1 = 291, and firm 2 has a cost function of C2 = 392. Use a Cournot model to calculate the Nash equilibrium outputs 91 and 92 of the two firms. (a) Give each firm's profit as a function of 91 and 92: (b) Compute the Nash equilibrium q1 and 42.

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