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MicroeconTheory: Cournot solution for oligopoly

  1. Oct 1, 2012 #1
    Hello, I have a very brief conceptual question:

    Given two firms, let's say for instance that P = 200 - 10Q, where Q is the combination of firm A & B.

    Would the marginal revenue be solved by multiplying one of the individual firm's quantity by 2. That is, the marginal revenue for firm A would be solved from:
    0 = 200 - 10q(b) - 20q(a)

    Given that this is true, is this monopolistic-like solution only possible in such a theoretical oligopolistic duopoly because each firm's output is still dependent upon the other's output? I understand that a marginal revenue curve having twice the slope as the price curve is true only for monopoly situations, and therefore I am wondering what is the theory behind why it is also applicable in a duopoly.

    Also, given that this is true, is it also true in oligopolies with more than two firms given that each firm's output is still dependent upon each other firm's output?
     
  2. jcsd
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