# Basic Oligopoly Models

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.

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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 ...

#### 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.