The market demand function is Q = 7000 - 1000p Each firm has a marginal cost...

The market demand function is Q = 7000 - 1000p

Each firm has a marginal cost of m = $0.16 Firm 1, the leader, acts before Firm 2, the follower. Solve for the Stackelberg-Nash equilibrium quantities, prices, and profits. Compare your solution to the Cournot-Nash equilibrium.

The Stackelberg-Nash equilibrium quantities are:

q1 = _______ units and q2 = ________ units.

The Stackelberg-Nash equilibrium price is:

Profits for firm 1 is:

Profits for firm 2 is:

The Cournot-Nash equilibrium price is:

Profits for Firm 1 is:

Profits for Firm 2 is:

Expert Solution

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Rahul Sunny answered 7 months ago

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