Econ ON OLIGOPOLY & SOME GAME THEORY IDEAS WITH OLIGOPOLY Assignment

Econ ON OLIGOPOLY & SOME GAME THEORY IDEAS WITH OLIGOPOLY - Assignment ExampleIn the contestable market the evaluation of dealings among present-day(prenominal) firms and prospective entrants is investigated more critically. The market incumbents maintain an oligopoly through the determination of price levels in the market in their party favor. Again the oligopoly is maintained by the government favor and creates a barrier for other firms from venturing in the market.2) Suppose there are two firms operating in an oligopoly (termed a duopoly), where the firm 1 cost part is given by C1 = 18Q1, for C1 = total cost, and Q1 = firm 1 output signal. The cost function for firm 2 is given by C2 = 21Q2, and C2 = total cost of firm 2, and Q2 = output of firm 2. The inverse demand for the product, Q, being sold by the oligopolist firms is given by P = 127 3Q, where Q = Q1+ Q2, and Q1 and Q2 are the same product (vats of toxic solution for breakout down chemical components to be used in down stream plastic manufacture).Taking into the devotion the Cournot model in regard to the duopoly that is two firms where both firms concurrently decide a quantity to produce. Designating the quantity q1 as the amount produced by firm 1 and q2 as the tally amount produced by firm 2. so the total quantityThe firm production choices are strategic substitutes. That is, an increase in the amount produced by firm1 (holding fixed the underlying amount produced by the agree firm 2) will considerably lower the market price and thus resulting in lesser profits for firm 2. Thus, every firm ought to take into consideration the prevailing the production decisions of the other supplementary firm in the process of undertaking its individual production decisionFirm 1 possess a marginal cost of production equivalent to c1 accompanied by firm 2 which possess a marginal cost of production equivalent to c2. The corresponding Nash equilibrium is computed through the employment tow