Home Assignment #4 Comparison of Perfect Competition, Monopoly, Bertrand, Cournot, and
Home Assignment #4 Name:
Comparison of Perfect Competition, Monopoly, Bertrand,
Cournot, and Stackelberg Duopoly
This worksheet can be used to calculate equilibrium outcomes
under different market structures for linear demand and constant marginal cost.
Fixed costs are zero.
Firm-level quantity, total quantity, price, firm profits,
industry profits, consumer surplus, welfare and DWL are reported. Profit refers to the total industry profit,
Profit=Profit1+Profit2, and W=CS+Profit.
Base Parameters a b c1 c2 Table
0: Perfect Competition
Case 1 40.00 1.00 10.00 10.00 P Q Profit CS W DWL
Case 2 40.00 1.00 5.00 10.00
Case 3 60.00 1.00 10.00 10.00
My Parameters a b c1 c2
Case 1 40.15 1.18 10.94 10.07
Case 2 40.63 1.45 5.11 10.08 Table
1: Bertrand Table
2: Monopoly or Collusion
Case 3 60.58 1.98 10.79 10.16 P Q Q1 Q2 Profit1 Profit2 Profit CS W DWL P Q Q1 Q2 Profit1 Profit2 Profit CS W DWL
3: Cournot Table
P Q Q1 Q2 Profit1 Profit2 Profit CS W DWL P Q Q1 Q2 Profit1 Profit2 Profit CS W DWL
demand intercept Instructions
c1 Firm 1’s
marginal cost In
this assignment, you are asked to calculate the equilibrium outcomes under
Perfect Competition, Monopoly (Collusive Outcome), Bertrand, Cournot, and
c2 Firm 2’s
P Price 1.
Insert the formulas in the tables (Table 0, 1,2,3, and 4) to calculate the
equilibrium outcomes. Use the parameters listed at the top of this worksheet,
but add a random component +RAND() to each parameter (as it is done in My
Parameters). Each student’s parameters should be different.
produced by firm 1
produced by firm 2 2.
In a separate worksheet titled Graph, plot the best-response functions for
firms 1 and 2 (under Cournot competition, Case 1: My Parameters) and isoprofit
curves for firm 1. Plot 5 different isoprofit curves for firm 1, which
correspond to different levels of profit, making sure to plot isoprofit curves
that go through the Cournot and Stackelberg equilibria and to label the
Profit1 Profit of firm
Profit2 Profit of firm
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