only 2 firms in the market, demand curve is given by P=11-Q1-Q2. The constant marginal cost of both firms is 1. Suppose that 2 firms do not compete in a cournot fashion but they will compete in a bertrand fashion. What is the price you will observe now?
Answer:
Assuming that he good produced by both firms is identical, Bertrand competition results in the competive outcome P1=P2=1=MC.
ask the POPE
magnitude of price changes would depend very much on effectiveness of the policies undertaken during the competition
We would expect the price to equal 6 for this is the last time where MR will be greater than 1. This would lead to a quantity supplied of 5 units.
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