Two producers act on a market of two heterogeneous substitute products. The first producer (leader) can set an optimal price of her/his product on a level that guarantees her/him the maximum profit regardless a price level of a product supplied by the competitor. The second producer (follower) decides on a price level of her/his product depending on the other product's price set by the leader. There are given functions of:

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(a) production total costs for both producers: Vi = 1,2 clt (y) = { (yi) + c{ (yi) = C Yi + di, ci, di > 0, (b) demand for the first producer's (leader) product: y (P, P2)=b-api, a, b, > 0,