Purchase Solution

Stackelberg Duopoly

Not what you're looking for?

Ask Custom Question

11. The inverse demand curve for a Stackelberg duopoly is . The leader's cost structure is . The follower's cost structure is .
a. Determine the reaction function for the follower.
b. Determine the equilibrium output levels for both the leader and the follower.
c. What are the profits for the leader? For the follower?

Attachments
Purchase this Solution
Solution Summary

The expert determines the reaction function for the follwer. Stackelberg Duopoly demand curve is examined.

Solution Preview

first we write down the profit functions for both firms (remember profit = revenue-cost = price X sales quantity - cost; and price = 10000-6Q = 10000 - 6Ql - 6Qf, because total quantity = leader's quantity + follower's quantity)

leader's profit = (10000-6Ql - 6Qf)Ql - 15Ql = 10000Ql - 6Ql^2 - 6QlQf - 15Ql

take the ...

Purchase this Solution
Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium

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

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.

Basics of Economics

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

Elementary Microeconomics

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

View More Free Quizzes
Related BrainMass Solutions

  • Stackelberg duopoly

    20528 Stackelberg duopoly I have changed the values and need the model to plug my numbers in. Please solve with explanations. 1. The inverse demand curve for a Stackelberg duopoly is P = 5,000 - 3Q.

  • Dominant Strategies: Managerial Economics

    Stackelberg Duopoly c. Cournot Duopoly d. Pure Competition 14. Suppose There are three farmers (Farmer A and Farmer B and Farmer C). The current zoning allows the land to be used for any purpose. Farmer A has chosen Pig Farming.

  • Economics - 5 multiple choice problems

    None of the above 4. 2 firms compete as a Stackelberg duopoly. The demand they face is P = 100 -3Q. The cost function for each firm is C(Q) = 4Q. The profits (X) of the 2 firms are: A. X L = $384; X F = $192 B.

  • Problems in market structures

    Stackelberg B. Cournot C. Bertrand D. Stackelberg and Cournot Answer: D. Stackelberg and Cournot In a market where two firms compete by setting quantity, the Cournot equilibrium has which of the following characteristics? A.

  • Multiple Choice Questions

    Stackelberg leader D. Stackelberg follower 31. The inverse demand in a Cournot duopoly is P = a - b (Q 1 + Q 2), and costs are C1 (Q1 ) = c 1 Q 1, and C 2 (Q2) = c 2 Q 2 .

  • market demand and asymmetric cost functions

    Suppose now Boeing is the Stackelberg leader. What are the optimal outputs for the two firms and the market price under this assumption? When Boeing is the Stackelberg leader, it takes into account how the follower will react.

  • cournot duopoly

    99231 Question from Industrial Organization GIVEN: TC(qi)=5 qi+10, i=12 P(Q)=20-2Q ASSUME: a cournot duopoly where Q=q1+q2 DEMONSTRATE: the total output is less than the competitive output but more than the monopoly; the duopoly price

  • Stackelberg Equilibrium & SPNE

    556096 Stackelberg Equilibrium & SPNE Please help me with the following: 5.

  • Equilibrium deadweight loss in duopoly

    Equilibrium deadweight loss in Cournot duopoly given demand and cost functions

View More Related Solutions