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Price Effects of Regulation

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Before the deregulation, the 500 trucking firms collude with each other and produce like a monopoly: the combined market is
<br>P = 500 - 0.004Q
<br>TC = 10 + q + 0.5q^2
<br>Then total revenue is TR=P*Q= (500 - 0.004Q)*Q =500 - 0.004Q^2
<br>"^" means to the power of
<br>then MR=dTR/dQ=500 - 0.008Q
<br>however, the firms' MC = dTC/dQ=1+Q
<br>MC=1+q or q=MC-1
<br>Since there are 500 firms,
<br>Or ...

Solution Summary

The market demand for trucking services is determined.