CAOT 31 Lecture Notes - Lecture 16: Fixed Cost, And1, Market Failure
12 Oct 2020
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Tutorial 3: dynamic games; interest groups and the role of firms in politics. Comments: for the article by weymouth: you should make sure to have a solid understanding of the purpose, setup and conclusions. More generally, the two subsections that are relevant for the course are 9. 3 and 9. 4. It is sufficient if you skim the other parts as background: the following is a recommended though not mandatory article: mobarak, m. and d. purbasari, "protection for. Sale to firms: evidence from indonesia", yale university working paper, 2006. 1. consider the cournot model introduced in the lecture, with two firms that have identical cost functions: c(q)=40q. The two firms choose their quantities simultaneously and face market demand described by p=100-q. Hence, the profit of firm 1 as a function of its own chosen quantity and the quantity of the other firm is: i = (100-q1-q2)q1 - 40q1. Nash equilibrium price, and the quantities chosen by the individual firms and in total.
