Question

Assume that two firms compete by setting quantities independently and simultaneously(Cournot). The inverse demand for the homogenous product is P = 1– q1 – q2 · The two firms have

constant marginal cost c = c2 = c = 0.1. In the game a) there is no Nash equilibrium. b) the price in the Nash equilibrium is 0.1. c) the ratio (P – c)/P is equal to the Herfindahl index.- d) None of the above.

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