Question: You are analyzing a certain oligopolist industry with of only two companies: firm A and firm B. Both companies have a production process…

Question:

You are analyzing a certain oligopolist industry with of only two companies: firm A and firm B. Both companies have a production process with constant marginal costs of $2000. Assume there are no fixed costs.

As a consequence of a change in the operating structure of firm B, their marginal cost increased to a constant amount of $2100. Firm A still produces at the same marginal cost as before.

What happens to each firm’s profits and output in the new equilibrium in each of the following oligopoly markets:

  1. Cournot oligopoly
  2. Sweezy oligopoly
  3. Bertrand oligopoly

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