Cournot

                        Demand: P = a - Q                     Cournot Equilibrium
                               ...
Price must be the same for both
                      We need to make a decision about capacity
Firm 2                Prod...
establish capacity
eat. In Collusion equilibrium, we have incentive to cheat
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Cournot And Stackelberg Solver Model

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Cournot And Stackelberg Solver by Xavier Lehnhoff

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Cournot And Stackelberg Solver Model

  1. 1. Cournot Demand: P = a - Q Cournot Equilibrium Firm 1 a= 100 Quantity 32.667 Marginal Cost Firm 1 MC1 = 2 Price 34.667 Marginal Cost Firm 2 MC2= 2 Profits 1067.111 Total Quantity 65.333 Stackelberg Demand: P = a - Q Stackelberg Equilibrium Firm 1 a= 12 Quantity 3.500 Marginal Cost Firm 1 MC1 = 4 Price 5.750 Marginal Cost Firm 2 MC2= 3 Profits 6.125 Total Quantity 6.250 First mover advantage: occurs in the case of capacity decisions. by Xavier Lehnhoff
  2. 2. Price must be the same for both We need to make a decision about capacity Firm 2 Product is homogeneous Quantity 32.667 Decisions are simultaneous, static game Price 34.667 Depending on what one player does and demand, we establish capacity Profits 1067.111 In Cournot equilibrium, no players have incentive to cheat. In Collusion equilibrium, we Firm 2 Quantity 2.750 Price 5.750 Profits 7.563
  3. 3. establish capacity eat. In Collusion equilibrium, we have incentive to cheat

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