Assume that Smith Inc. and Wang, Inc. compete in an oligopolistic setting.
They produce a homogeneous product and face the following industry demand curve:
P = 20 - .01Q
Where Q = Q1 + Q2
a. Each firm faces a marginal cost of $10. Find the equilibrium quantity produced by each firm in the Cournot equilibrium. What is the equilibrium price and profits for each firm?
b. What are the equilibrium price, combined output, and profits with Bertrand competition?© BrainMass Inc. brainmass.com October 16, 2018, 8:41 pm ad1c9bdddf
Word file contains calculations of the equilibrium quantity produced by each firm, equilibrium price, combined output, and profits.
Oligopoly Market Structure: Price Fixing in an Oligopoly
Testifying at a price fixing trial involving Cargill Corp. and the market for chicken growth hormone, (in which the Cargill is one of only three firms worldwide), an executive for Perdue said: "It's an oligopoly. When one (firm) changes price, they all do... usually within minutes."
Why is it not surprising to find that in an oligopoly which sells a basically undifferentiated product like chicken growth hormone all the firms change prices simultaneously, even if there is no explicit price fixing?View Full Posting Details