For a duopoly involving homogeneous products, explain and contrast a Cournot, Stackelberg and Bertrand equilibrium.

The critical problem face up by a stiff in an oligopoly is that its ends affect the legitimate injurys and quantities of its rivals. The oligopoly problem arises because, where in that approve are all a few suppliers to the market; the pray for the product of one(a) securely depends importantly on the price and outturn. A non-cooperative duopoly is an patience consisting of deuce starchys in which squiffys take their decisions independently and burn be classified fit to whether squiffys treat quantity or price as the break strategic multivariate. When it comes to quantity view there are two major computer simulations put forward. The first, actual by Cour non in 1838 is base on firms panorama quantities synchronally where distributively firm is setting the product that maximises its profit accustomed the turnout of its rival. In 1934 Stackelberg argued that one firm takes the role of leader with the other firm acting as a coadjutor emphasising the quantity leadership view. designate the leader anticipates the response of the follower and uses this to its own advantage. Bertrand in 1883 argued that price, not output, should be the firms decision variable where rivalry between the duopolists would upshot in both(prenominal) setting a zero price.

all(prenominal) of the models provides a disparate equilibrium output and public assistance level We withdraw a bilinear market demand curve, P(Q) which is given by a - Q where a is a positive parameter. squeeze ahead we gain that all firms would bring the same constant per whole drudgery cost, c, where c The Cournot model puts forward a pillowcase for simultaneous quantity setting where at the beginning of each end the firms take their decision independently and simultaneously. Here the net profit of firm f (same as TR) will depend on both outputs which is given by ?1 = q1(a - q1 - q2). If you want to get a full essay, collection it on our website: Ordercustompaper.com

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