Febreze f and glade g are two brands of air freshener

Reference no: EM13375774

Febreze (F) and Glade (G) are two brands of air freshener. Consumers consider the product a homogeneous good, but the market is actually a duopoly. The producers compete by choosing how many units to supply. The total quantity in the market is Q_T = Q_F +Q_G. Additionally, the two companies have different constant marginal costs, MC_F = 60 and MC_G = 72. On the demand side, consumer demand for air freshener is: P = 120 - Q_T

(a) Suppose that the two companies choose the quantities simultaneously. Find the quantity supplied by each company, the price of the air freshener, the total quantity consumed, and profits for each brand.

(b) Suppose Glade made a contract with the government and acquired the right to choose its quantity first. Febreze now has to observe Glade's quantity choice and then choose its own quantity. Find the quantity supplied by each company, the price of the air freshener, the total quantity consumed, and profits for each brand. Is there a first mover's advantage for Glade?

(c) Febreze is dissatisfied with this market situation and it is considering to buy the "right to move first" from Glade. Once Febreze acquires the "right to move first", Glade has to make the quantity decision after Febreze chooses its quantity. Can there be suitable transactions between Glade and Febreze for this arrangement? If yes, compute a range of prices at which both parties could agree.

(d) Suppose that the firms decide to merge into one big firm. Find the quantity, price and profits in equilibrium. Calculate the consumer surplus. Are consumers better off or worse off in this situation than in (a)?

Reference no: EM13375774

Questions Cloud

Yumi is a lawyer specialized in mampa when she takes a case : yumi is a lawyer specialized in mampa. when she takes a case she receives 1000 as a basic payment. if she manages to

Chens car is worth 5000 but she is sometimes careless and : chens car is worth 5000. but she is sometimes careless and leaves the door open and the keys in the ignition.

In cast away islands there is only one company : in cast away islands there is only one company allelectronics which produces tv. it is the sole employer of engineers

Consider the market for smart-phones with two dominant : consider the market for smart-phones with two dominant players applea iphone4s and samsungs galaxy. these smart phones

Febreze f and glade g are two brands of air freshener : febreze f and glade g are two brands of air freshener. consumers consider the product a homogeneous good but the market

Consider the graph belownbsp it contains 2 separate demand : consider the graph below.nbsp it contains 2 separate demand curves d1 and d2 the marginal revenue curve associated with

A complete the table above you do not have to complete any : a. complete the table above. you do not have to complete any cell with - in it. be careful calculating mc and mr note

1 you are a factory owner who has just purchased a new : 1 you are a factory owner who has just purchased a new machine for 5000. over the next year it would have cost you 1000

1 i give you 1000 you put it in a bank collection 5 : 1 i give you 1000. you put it in a bank collection 5 interest. how much money will you have after 5 years?2 now instead

User Account

All Pages