the Cournot model assumed the firms acted independently.
Suppose instead the two firms collude to set production quantities. (a) Find the optimal production quantity for each firm assuming the unit costs are the same for both firms, c 1 = c 2 = c. (b) Show that the optimal production quantities in the cartel solution are unstable in the sense that they are not best responses to each other. Assume c 1 = c 2 = c.
the Cournot model assumed the firms acted independently.