Duopoly outcome with collusion: Each firm agrees to produce Q = 170, earns profit = $6,800. |
If Vodafone reneges on the agreement & produces Q = 250, what happens to the market price? And Vodafone's profits? |
Is it in Vodafone's interest to renege on the agreement? |
If both firms renege and produce Q = 250, determine each firm's profits. |
|
P | Q |
$0 | 1000 |
$5 | 900 |
$10 | 800 |
$15 | 700 |
$20 | 600 |
$30 | 500 |
$40 | 420 |
$50 | 300 |
$60 | 200 |
$70 | 100 |
|