Cartel and Collusion The market demand is P = 100 - 5Q, firms are forming cartels

Marketing Jan 12, 2021

Cartel and Collusion The market demand is P = 100 - 5Q, firms are forming cartels. The marginal cost of each firm is mc = 10 + 2Q. there are a total of 10 firms in the market.

a) assume all the firms form one cartel. Characterize the cartel equilibrium and each firm's optimal production level.

b) assume that only 5 firms are in the cartel and the rest 5 firms are not in the cartel. Characterize the cartel equilibrium and each firm's optimal production level.

c) now assume a total of 20 firms in the market and all the firms form one cartel. Recharacterize the cartel equilibrium and each firm's optimal production 1 level.

d) now assume a total of 20 firms in the market, with 12 firms forming a cartel and the rest 8 firms not in the cartel. Recharacterize the cartel equilibrium and each firm's optimal production level.

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