Joint equilibrium quantity, Microeconomics

The sole producer of the anti-diarrhea drug STOP supplies two retail pharmacies in an isolated village. The two pharmacies compete à la Cournot in a market characterized by an inverse demand function

 

                       P(Q)= 100-Q

where p  is the price consumers pay for a package of pills. The costs the pharmacies have per package sold are €40 plus the amount they have to pay for a package to the producer of STOP. Assume that the marginal cost of STOP is €12 per package and that there are no fixed costs. Moreover, suppose that STOP uses a two-part tariff with a price per package equal to S p and a fixed amount f  which both pharmacies require to pay to STOP to become its eligible suppliers.

 

a. Assume that the fixed amount f is so low that both retailers remain in the market. What is the joint equilibrium quantity of the two pharmacies that will be offered as a function of p ?

 

Posted Date: 3/28/2013 1:06:49 AM | Location : United States







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

Write discussion on Joint equilibrium quantity
Your posts are moderated
Related Questions
Discuss how the opportunity cost principle influence a supplier''s decision to supply labour

choose a topic from microeconomics that matters to you and find a recent news article covering that topic?


Q. What is International Monetary Fund? International Monetary Fund: An international financial institution established after World War II with the goal of stabilizing and regu

Under specified assumptions, derive the square-root formula of the Baumol-Tobin's inventory model of transactions demand for money and briefly describe the effect of a one period i

With current technology, suppose a firm is producing 400 loaves of bread daily. Assume that the least cost combination of resources in producing those loaves is $180 ( 5 units of

If I submit an economics problem(Home work), How soon it will be answered?

Q. What do you meant by Retained Earnings? Retained Earnings: Business profits that aren't distributed to shareholders (by dividends or other pay-outs) thoughinstead are retain

Joe won $365,000 a year for life in the state lottery. Use a labor-leisure choice analysis to answer the following: a. Show how Joe’s lottery winnings affect the position of his b

WTO Agreements: The WTO administers 29 agreements; these cover different areas like trade in goods and services, investment measures, intellectual property rights, etc. Some o