Suppose Cournot duopolists firms (A and B) face the same market demand curve, and initially have identical costs. Firm A figures out a way of reducing its marginal cost. At the new Nash-Cournot equilibrium,

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When Firm A reduces its marginal cost, it can produce more at a lower cost, leading to an increase in its output. As a result, Firm B's output contracts because the market price decreases due to increased total output, reducing Firm B's profitability.

Suppose Cournot Duopolists Firms (A and B) Face the Same