9. Suppose we have a duopoly and call the firms Firm 1 and Firm 2. The...
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9. Suppose we have a duopoly and call the firms Firm 1 and Firm 2. The inverse demand function of the market is D-¹ (9₁,92) = 6 - (91 +92) where q₁ is the quantity produced by Firm 1 and q2 is the quantity produced by Firm 2. The cost function of Firm 1 is c₁ (9₁) = 2q₁. The cost function of Firm 2 is c₂ (9₂2) = 19². Find the equilibrium quantity of each firm and the equilibrium price of the good if we have a Stackelberg Model where Firm 1 chooses quantity first. This means Firm 1 is the quantity leader. 9. Suppose we have a duopoly and call the firms Firm 1 and Firm 2. The inverse demand function of the market is D-¹ (9₁,92) = 6 - (91 +92) where q₁ is the quantity produced by Firm 1 and q2 is the quantity produced by Firm 2. The cost function of Firm 1 is c₁ (9₁) = 2q₁. The cost function of Firm 2 is c₂ (9₂2) = 19². Find the equilibrium quantity of each firm and the equilibrium price of the good if we have a Stackelberg Model where Firm 1 chooses quantity first. This means Firm 1 is the quantity leader.
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To solve this problem we need to use the Stackelberg Model to determine the equilibrium quantities and price of the good in the duopoly In the Stackel... View the full answer
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