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EXERCISE 2 Two rms are participating in a Stackelberg duopoly. The demand function in the market is given by Q = 2000 2P. Firm 1's total cost is...

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EXERCISE 2 Two firms are participating in a Stackelberg duopoly. The demand function in the
market is given by Q = 2000 — 2P. Firm 1’s total cost is given by 01(q1) = ((11)2 and
Firm 2’s total cost is given by 02(q2) = 100q2. Firm 1 is the leader and Firm 2 is the
follower. (1) Write down the inverse demand function and the maximization problem for
Firm 1 given that Firm 2 is expected to produce R2(q1). (2) Compute the reaction function R2011) for Firm 2. (3) Find the market price and the quantities supplied by the firms in the Stackelberg
equilibrium of this game.

Top Answer

Q=2000-2P firm 1- leader firm 2- follower C(q)=Q 1 2 C(q)=100Q 2 Inverse demand function Q=2000-2P 2P=2000-Q P=1000-0.5Q... View the full answer

Stackelberg.jpeg

04
Q = 2000 - 2 P
Firm.`
- D 1 =_ De_
-3 Follows_
[CQ) = Q
|1) Moves Slammand Function`
`_ _ _ODD rap
AP = 200 0 - 12
P = IDDO _ 0. 5^
Pron't Hick Problem For Fink !
TA = PR2
bout P = 100 0 - 9:50...

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