Suppose that a Stackelberg leader and a Stackelberg follower each have a constant marginal cost of...

Suppose that a Stackelberg leader and a Stackelberg follower each have a constant marginal cost of c. Market demand takes the form p = a-bQ.

A. What is the best response function of the Stackelberg follower?

B.. What is the leader's profit-maximizing q?

C. What is the follower's profit-maximizing q?

D. What is the market price?

Somebody else solved this question. But, feel like the person got the derivatives wrong on part B and caused the other parts to also be wrong. Thank-you

Expert Solution

Rahul Sunny answered 2 years ago

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