Industry with 2 firms, each with constant marginal cost MC= 2.
• Fixed cost of each firm is zero FC= 0.
D
Market demand is P= 8-Q.
(i)
Determine output and price under a Cournot equilibrium. (ii) Determine output and price under a Bertand equilibrium. (ini) Determine output and price under a Stackelberg equilibrium. (iv) Explain why oligopolies prefer to collude with this example.
(v) Why don't oligopolies collude all the time?
(vi) Explain why the government doesn't like collusion with this
example.
