Question

Consider the three firms Cournot oligopoly with the following inverse demand function: P =100 – 20, – 2Q, – 203. The firms' cost functions are identical and are given by

C(Q;) = 10 +-2Q;. Based on this information, firm 1, 2 and 3's reaction functions are: r1(Q2) = 24.5 - 0.5Q1 and r2(Q1) = 24.5 – 0.5Q2 and r3(Q1,Q2) = 24.5 - 0.5(Q1+Q2)%3D r1 (Q2,Q3) = 12.25 - 0.5(Q2+Q3) and r2(Q1,Q3) = 12.25 - 0.5(Q1+Q3) and r3(Q1,Q2) =12.25 - 0.5(Q1+Q2). r1(Q2,Q3) = 49 - 0.33(Q2+Q3) and r2(Q1,Q3) = 49 – 0.33(Q1+Q3) and r3(Q1,Q2) = 49 -0.33(Q1+Q2). r1(Q2,Q3)- 0.5(Q1+Q2)= 24.5 – 0.5(Q2+Q3) and r2(Q1,Q3) = 24.5 - 0.5(Q1+Q3) and r3(Q1,Q2) = 24.5

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