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Cournot Nash Equilibrium Between Two Firms

• posted by: Kitsune Cavalry on 2012-02-23
• tagged: microeconomics, homework
• score: 3

Suppose we have two firms with specialized, but similar products. Suppose market demand for the two products is: $p_1(q_1,q_2)=a-bq_1-dq_2$ $p_2(q_1,q_2)=a-bq_2-dq_1$ where $d \in (-b,b)$. Suppose that both firms have cost $c(q)=q$

What does $d$ mean intuitively? Is the Cournot Nash Equilibrium for this $q_1=\frac{2ba - ad + dc'(q_2)-c'(q_1)2b} {1 - d^2}$ $q_2=\frac{2ba - ad + dc'(q_1)-c'(q_2)2b} {1 - d^2}$ Thanks a ton.

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