An electricity industry contains two generating firms, one of which has marginal cost= $2.50 and the other of $1.50; the demand curve is Quanity=40-4*price. Quanities are in MWH and price are in $/Mwh. Very low production cost!
A. Find cournot Equilibrium price and quanitiy.
B. Answer the same question as in part a if the firms behave according to the assumptions of the bertrand model.