Not Exactly Rocket Science describes an experiment in which vervet monkeys are observed to trade grooming favors for fruit.  At first one of the monkeys had an exclusive endowment of fruit and earned a monopoly price.  Next, competition was introduced.  The endowment was now equally divided between two duopolist monkeys and as a result the price in terms of willingness-to-groom dropped.

Now, were the monkeys playing Cournot (marginal cost equals residual marginal revenue) or Bertrand (price equals marginal cost)?  (The marginal cost of trading an apple for a grooming session is the opportunity cost of not eating it.)  We need another treatment with three sellers to know.  If the price falls even further then its Cournot.  In Bertrand the price hits the competitive point already with just two.

Intermediate micro question:  Can Monkey #1 increase his profits by buying the apples from Monkey #2 at the equilibrium price and then acting as a monopolist?

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