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Three firms compete in the style of Cournot

Economics

Three firms compete in the style of Cournot. The inverse demand is P(Q) = a - Q. Scenario 1: All three firms have the same constant marginal cost MC = C. Scenario 2: Firm 1 has MC = 0.5c, Firm 2 has MC = C, and Firm 3 has MC = 1.5c. Assume that a > 3c. Which of the following is correct for the HHI in Nash equilibrium? HHI in scenario 1 > HHL in scenario 2 HHI in scenario 2 > HHL in scenario 1 HHI in scenario 1 = HHL in scenario 2 Any of the first three options is possible depending on the value of a Any of the first three options is possible depending on the value of a and c.

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