Bombardier and Embraer have a duopoly in the production of commercial aircraft used as regional jets that seat 40-100 passengers. Suppose the marginal cost of producing each plane is $10M, there are no fixed costs, and the global demand for regional jets is given by the table below:

Price

Qty demanded

50M

50 planes

45M

100 planes

40M

150 planes

35M

200 planes

30M

250 planes

25M

300 planes

20M

350 planes

15M

400 planes

10M

450 planes

5M

500 planes

What is the socially efficient quantity of planes?

If, instead, Bombardier and Embraer form a cartel and sustain full cooperation (price like a monopolist), at what price and quantity would they sell them? Assuming they evenly split the production, how much profit would they each make?

"Get 15% discount on your first 3 orders with us"
Use the following coupon
"FIRST15"

Order Now