Discuss how the optimality conditions di§er in the collusive agreement from the Cournot oligopoly agreement
Consider the oligopoly model we discussed in class with I competitors and linear demand and cost functions: p (q) = a bq; c (q) = c q 1 In class, we discussed informally, the outcome under a collusive agreement under which a representative Örm i would choose (for all other Örms) a quantity that would maximize the industry proÖt. Formally describe the resulting optimization problem, and derive the optimal collusive agreement. Discuss how the optimality conditions di§er in the collusive agreement from the Cournot oligopoly agreement
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