I recently got this question as a homework exercise, and I tried to do it but am having a lot of trouble and would love any help you can give.
Thanks guys, here's the question:
The market for luxury female shoes consists of two firms: Milono Shoes and Blanc Shoes. Milono Shoes has a patented technology that permits it to produce its stiletto shoes in a manner that is more efficient than its rival, Blanc Shoes. As a result, Milono Shoes is the first to choose its profit-maximising output level in the market. Milono Shoes is considering whether or not it should undertake a merger with Blanc Shoes as an external consultant has suggested that a merger would be profitable. The inverse demand function for luxury female shoes is given by P = 800 – 4Q, Milono Shoes costs are CM(QM) = 40QM and the costs for Blanc Shoes are given by CB(QB) = 40QB.
Would it be profitable for Milono Shoes to merge with Blanc Shoes? If not, explain why not.
Again, thanks for your help in advance guys.