
Price and Output Determine Oligopoly 133
determined by nding the output of each rm at which their individual MR is equal to industry
MC. A horizontal line drawn form point C thought MR
B
and MR
A
determines their quota. As
panel (a) shows market share for rm A is determined at OQ
A
and panel (b) shows market share
of rm B at OQ
B
. us, the industry output OQ is shared between the two rms A and B, as
OQ
A
and OQ
B
, respectively. Note that OQ = OQ
A
+ OQ
B
. At output OQ
A
, MC of rm A equals
industry’s marginal cost, MC, and at output OQ
B
, MC of rm B equals industry’s MC. us,
under quota system, the quota for rms A and B would be xed as OQ