cournot equilibrium, Managerial Economics

Air Canada and KLM compete for customers on flights among Amsterdam and Toronto. The total number of passengers (Q) flown by these two firms is the sum of passengers who fly KLM, Qk and those who fly Air Canada, Qc. Suppose that no other companies can enter the route Due to they cannot obtain landing rights at both airports. Market demand is given by:

2302_aa.png

where p is the cost of a one-way flight (in Euros), and Q is claculated in thousands of passengers flying one-way per quarter. Every airline has a constant marginal and average cost of €147 per passenger per flight.

 

a) Determine the Cournot equilibrium.

b)  Assume both airlines receive a subsidy of €54 per passenger. Derive the new Cournot equilibrium. What is the effect of the subsidy? How much of the subsidy is passed on to the passengers?

 

 

Posted Date: 3/26/2013 5:16:52 AM | Location : United States







Related Discussions:- cournot equilibrium, Assignment Help, Ask Question on cournot equilibrium, Get Answer, Expert's Help, cournot equilibrium Discussions

Write discussion on cournot equilibrium
Your posts are moderated
Related Questions
#quest Describe the oligopoly market structure and give some examples.ion..

Comment on the consequences of environmental degradation on the economy of a community.

is the sales maximization applicable

The production function of a small shop that frames pictures is Q = 5 √ LK where Q is the number of pictures framed per day, L is labor hours and K is the machine hours.

Opportunity cost is cost of a different that must be forgone in order to pursue a definite action. Put another way, the advantages you could have received by taking an alternative


Consider a magnetic disk consisting of 16 heads and 400 cylinders. This disk is divided into four 100-cylinder zones with the cylinders in different zones containing 160, 200, 240,

Market research operations to obtain reliable and relevant information about the trends in market. A data analysing and processing system to estimate as well as evaluate the s

Prices of other related goods i)           Substitutes:   If X and Y are substitutes, then if the price X increases, the quantity demanded of X falls.  This will lead to inc

Using the relationship among the price of a visit to a physiotherapist and the quantity of visits demanded, explain and distinguish between the direction, the slope, and the positi