Quasar Corporation Is Set to Release Its Latest Video Game $\iff$

question 110

Essay

Quasar Corporation is set to release its latest video game system which utilizes the newest game technology. In fact, the release date is sooner than that of its only rival Orion. This gives Quasar Corporation "first-move" ability.
The demand for video game systems is: Q^d = 150 - 0.1P $\iff$ P = 1,500 - 10 Q^d.
Orion's marginal revenue curve is: MR_O(q_O, q_Q) = 1,500 - 20 q_O - 10 q_Q.
The marginal cost functions are:
.
Determine Orion's reaction function. Given that Quasar Corporation has this information and moves first, Quasar's marginal revenue function is:
(q_Q) =
- (
)q_Q. Calculate Quasar Corporation's optimal output level. Does the "first-move" ability of Quasar Corporation allow it to capture a larger market share?

---

Definitions:

Salvage Value

The expected salvage value of an asset after it has served its useful life.

Service Life

The expected period during which an asset remains usable, functional, or productive before it requires replacement or major repair.

Capitalize Interest

The process of adding the cost of interest on a loan to the balance of the loan instead of paying it out.

Accumulated Expenditures

The total amount of money spent on a project or investment over a period of time, often related to capital projects.