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Oligopoly / Public Firm Model


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Click the "Submit Parameters" button to run the model online with the default settings
- results are displayed graphically -

Please set the following parameters to specify your model. If you include a government firm, and if you want it controlled by a system of bonus weights, please specify the total amount of the bonus to be paid (10-100), and the type of bonus rates. The default total bonus is 20 units. You can also have the government target the industry output at the 'competitive level of output' to be achieved through bonus rates (4 firms or less with this option). Check out the derivation of the model at the bottom of this page.

Number of firms: 1 2 3 4 5 6
Private firm's behaviour: Competitive Cournot Cartel
Government firm control:
No Government firm Price taker
Bonus rates (max government firm's consumer + producer surplus)
Bonus rates (max industry's consumer surplus + g.f.'s producer surplus) - use with Cournot and Cartel
Target industry output with bonus rates (target = all firms at competitive level of output)
Total Bonus to be paid to the public firm's managers:
Type of Bonus System:
Profit & Output   Profit, Output, & Revenue Profit, Output, & G.F. Revenue
Economists love doing comparative statics (seeing how the equilibrium adjusts to changes in parameters). So I'll let you shift the industry's demand function upwards by 0-20 units.
Demand function: p = 83.6871 - 0.4692 * q + 0.0005017 * q^2
Shift demand function upwards by:
I'll also let you shift the industry's long run cost function upwards by 0-5 units.
Cost function: p = 50.2233 - 0.9174 * q + 0.0156 * q^2
Shift cost function upwards by:
Let me know if something weird happens. With 4 or more firms operating as a cartel, the model will drop 1 or more firms if the demand shift parameter is less than 7.

Check Out derivation of model

Return to economics page and an explanation of the model.

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