【正文】 ixed, and all firms decide simultaneously how much to produce ?Firm will adjust its output based on what it thinks the other firm will produce 169。2020 Pearson Education, Inc. Chapter 12 23 MC1 50 MR1(75) D1(75) If Firm 1 thinks Firm 2 will produce 75 units, its demand curve is shifted to the left by this amount. Firm 1’s Output Decision Q1 P1 D1(0) MR1(0) Firm 1 and market demand curve, D1(0), if Firm 2 produces nothing. D1(50) MR1(50) 25 If Firm 1 thinks Firm 2 will produce 50 units, its demand curve is shifted to the left by this amount. 169。2020 Pearson Education, Inc. Chapter 12 24 Oligopoly ?The Reaction Curve ?The relationship between a firm’s profitmaximizing output and the amount it thinks its petitor will produce ?A firm’s profitmaximizing output is a decreasing schedule of the expected output of Firm 2 169。2020 Pearson Education, Inc. Chapter 12 25 Firm 2’s Reaction Curve Q*2(Q1) Firm 2’s reaction curve shows how much it will produce as a function of how much it thinks Firm 1 will produce. Reaction Curves and Cournot Equilibrium Q2 Q1 25 50 75 100 25 50 75 100 Firm 1’s Reaction Curve Q*1(Q2) x x x x Firm 1’s reaction curve shows how much it will produce as a function of how much it thinks Firm 2 will produce. The x’s correspond to the previous model. 169。2020 Pearson Education, Inc. Chapter 12 26 Firm 2’s Reaction Curve Q*2(Q1) Reaction Curves and Cournot Equilibrium Q2 Q1 25 50 75 100 25 50 75 100 Firm 1’s Reaction Curve Q*1(Q2) x x x x In Cournot equilibrium, each firm correctly assumes how much its petitors will produce and thereby maximizes its own profits. Cournot Equilibrium 169。2020 Pearson Education, Inc. Chapter 12 27 Cournot Equilibrium ?Each firm’s reaction curve tells it how much to produce given the output of its petitor ?Equilibrium in the Cournot model, in which each firm correctly assumes how much its petitor will produce and sets its own production level accordingly 169。2020 Pearson Education, Inc. Chapter 12 28 Oligopoly ? Cournot equilibrium is an example of a Nash equilibrium (CournotNash Equilibrium) ? The Cournot equilibrium says nothing about the dynamics of the adjustment process ? Since both firms adjust their output, neither output would be fixed 169。2020 Pearson Education, Inc. Chapter 12 29 The Linear Demand Curve ?An Example of the Cournot Equilibrium ?Two firms face linear market demand curve ?We can pare petitive equilibrium and the equilibrium resulting from collusion ?Market demand is P = 30 Q ?Q is total production of both firms: Q = Q1 + Q2 ?Both firms have MC1 = MC2 = 0 169。2020 Pearson Education, Inc. Chapter 12 30 Oligopoly Example ?Firm 1’s Reaction Curve ? MR = MC 111 )30( PQR ??? :R e v e n u e T o t a l12211121130)(30??????169。2020 Pearson Education, Inc. Chapter 12 31 Oligopoly Example ?An Example of the Cournot Equilibrium 12211121111211521150230MCMRQRMR????????????Cu r v e Re a c t i on s239。 F i r mCu r v e Re a c t i on s139。 F i r m169。2020 Pearson Education, Inc. Chapter 12 32 Oligopoly Example ?An Example of the Cournot Equilibrium 10302010)2115(21152111??????????QP2:mE q u i l i b r i u Co u r n o t169。2020 Pearson Education, Inc. Chapter 12 33 Duopoly Example Q1 Q2 Firm 2’s Reaction Curve 30 15 Firm 1’s Reaction Curve 15 30 10 10 Cournot Equilibrium The demand curve is P = 30 Q and both firms have 0 marginal cost. 169。2020 Pearson Education, Inc. Chapter 12 34 Oligopoly Example ?Profit Maximization with Collusion MCMRMRRMRPQR????????????? and 15 Q w he n 023030)30(2169。2020 Pearson Education, Inc. Chapter 12 35 Profit Maximization w/ Collusion ?Contract Curve ?Q1 + Q2 = 15 ? Shows all pairs of output Q1 and Q2 that maximize total profits ?Q1 = Q2 = ? Less output and higher profits than the Cournot equilibrium 169。2020 Pearson Education, Inc. Chapter 12 36 Firm 1’s Reaction Curve Firm 2’s Reaction Curve Duopoly Example Q1 Q2 30 30 10 10 Cournot Equilibrium Collusion Curve Collusive Equilibrium For the firm, collusion is the best oute followed by the Cournot Equilibrium and then the petitive equilibrium 15 15 Competitive Equilibrium (P = MC。 Profit = 0) 169。2020 Pearson Education, Inc. Chapter 12 37 First Mover Advantage – The Stackelberg Model ?Oligopoly model in which one firm sets its output before other firms do ?Assumptions ?One firm can set output first ?MC = 0 ?Market demand is P = 30 Q where Q is total output ?Firm 1 sets output first and Firm 2 then makes an output decision seeing Firm 1’s output 169。2020 Pearson Education, Inc. Chapter 12 38 First Mover Advantage – The Stackelberg Model ?Firm 1 ?Must consider the reaction of Firm 2 ?Firm 2 ?Takes Firm 1’s output as fixed and therefore determines output with the Cournot reaction curve: Q2 = 15 189。(Q1) 169。2020 Pearson Education, Inc. Chapter 12 39 First Mover Advantage – The Stackelberg Model ?Firm 1 ?Choose Q1 so that: ?Firm 1 knows Firm 2 will choose output based on its reaction curve. We can use Firm 2’s reaction curve as Q2 . 1221111 300Q Q P Q R M CM R ????169。2020 Pearson Education, Inc. Chapter 12 40 First Mover Advantage – The Stackelberg Model ?Using Firm 2’s Reaction Curve for Q2: a n d 15:015211111????????MRRMR2111121112115 )2115(30R??????169。2020 Pearson Education, Inc. Chapter 12 41 First Mover Advantage – The Stackelberg Model ?Conclusion ?Going first gives Firm 1 the advantage ?Firm 1’s output is twice as large as Firm 2’s ?Firm 1’s