The market demand function is Q = 1,000 1,000p. Each firm has a marginal cost of

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The market demand function is Q = 1,000 – 1,000p. Each firm has a marginal cost of m = 0.28 (28¢ per unit). Firm 1, the leader, acts before Firm 2, the follower. Solve for the Stackelberg equilibrium quantities, prices, and profits. Compare your solution to the Nash-Cournot equilibrium.

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Managerial Economics and Strategy

ISBN: 978-0321566447

1st edition

Authors: Jeffrey M. Perloff, James A. Brander

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