Elucidate the best response functions for a and b

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Reference no: EM1358177

Assume an industry is a duopoly. The two firms are called Firm A and Firm B. Each firm is identical, and has a constant marginal cost of 20 per unit. The market demand curve is given by P=200-3Q, where Q is the total output produced by both firms: qA+qB.

It can be shown that the marginal revenue for A is:
MRA=200-6qA-3qB
and for firm B is:
MRB=200-6qB-3qA.

a) Write down the best response functions for A and B.

Reference no: EM1358177

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