Unlike Corrupt and Edgeworth made ls. Chamberlin model is based on the assumption that both thc producers recognise their mutual interdependence. The following diagram explains the model Suppose pluck A enters the krt first. DB is the demand curve and OL is the total output he chooses to produce. It is sold at price and the total profit made is OLlA. Now, the producer enters the market and produces quantity. Now, the total quantity produced is Duopoly Willi Product Differentiation When there product drfl crc riation. each duck has hi, clientele and goodwill. ‘I here is no fear of unmcdi.nc retaliatory measutcs hy the rival-, if one producer challgcs his puce-output policy. There is le~, danger of pncc-war. There will he IHI cement between them. Since products art: nut similar, the Iinn with better products call earn super normal profits.
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