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    Basic Oligopoly Models

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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 Determine equilibrium value of price, quantity and profit for each seller.

    Also see it in the attached file please.

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    https://brainmass.com/economics/general-equilibrium/basic-oligopoly-models-159151

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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.

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