Suppose identical price-setting duopoly firms have constant marginal costs of $50 per unit and no fixed costs. Consumers view the firms' products as perfect substitutes. The market demand is Q = 150 - P.

In Bertrand equilibrium,

1. firm 1s price is:

2. Firm 2s price is:

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Romarie Khazandra MarijuanLv10

28 Sep 2019

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Consider an industry with two firms (duopoly) that produce a homogenous product (same product). The two firms strategically choose their price (price is the choice variable, not quantity). Note, this is a Bertrand duopoly setting. Firm 1 has a cost function c1(q1)=25q1. and MC=25. and firm 2 has a cost function of C2(q2)=80+15q2 i.e. MC=15.The market demand is Q=100-p.

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