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Figure: Monopoly Profits in Duopoly
-(Figure: Monopoly Profits in Duopoly) The figure Monopoly Profits in Duopoly shows how an industry consisting of two firms that face identical demand curves (D₁) can collude to increase profits. If the firms collude to share the market demand equally, then each firm will act as if its marginal revenue curve is given by:

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Figure: Monopoly Profits in Duopoly

-(Figure: Monopoly Profits in Duopoly) The figure Monopoly Profits in Duopoly shows how an industry consisting of two firms that face identical demand curves (D₁) can collude to increase profits. If the firms collude to share the market demand equally, then each firm will act as if its marginal revenue curve is given by:

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When firms collude to share the market demand equally, each firm acts as if its marginal revenue curve is MR₁, which is derived from the shared demand curve D₁.

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