Re: MICro: cost curves for two plants

Posted by Amit Goyal on Jun 05, 2013; 2:02pm
URL: http://discussion-forum.276.s1.nabble.com/MICro-cost-curves-for-two-plants-tp7581776p7581800.html

b) How much should firm 1 be willing to pay to purchase firm 2 if collusion is illegal but a takeover is not?
To find the willingness to pay, find the Cournot equilibrium and hence Cournot profits of firm 1. And compare it with profits when only firm 1 operates. The difference between the two is the willingness to pay.