Purchase Solution

Basic Oligopoly Models

Not what you're looking for?

Ask Custom Question

Consider a duopoly with product differentiation in which the demand and cost function are:

Q1 = 88 - 4P1 + 2P2
C1 = 10q1
Q2 = 56 + 2P1 - 4P2
C2 = 8Q2

Derive a price reaction function for each firm on the assumption that each maximizes its profit with respect to its own - price elasticity Determine equilibrium value of price, quantity and profit for each seller.

Also see it in the attached file please.

Attachments
Purchase this Solution

Solution Summary

Solution shows a price reaction function for each firm on the assumption that each maximizes its profit with respect to its own - price elasticity Determine equilibrium value of price, quantity and profit for each seller.

Solution Preview

Please see attached file for detailed response to your posting.

Consider a duopoly with product differentiation in which the demand and cost function are:

Q1 = 88 - 4P1 + 2P2
C1 = 10q1
Q2 = 56 + 2P1 - 4P2
C2 = 8Q2

Derive a price reaction function for each firm on the assumption that each maximizes its profit with respect to its own - price elasticity ...

Purchase this Solution


Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.