Answer all question a b and c. Thanks

Question 3 [word limit: 750] Consider a pharmaceutical market served by two firms, firm 1 and firm 2. The two firms produce vaccines and compete to maximise own profits. Suppose that the demand of vaccines is given by where . Suppose that the two firms incur production costs equal to a. Suppose that the two firms move simultaneously, and . Derive and describe the Cournot/Nash equilibrium and provide a graphical representation of the best response functions. [10 marks] b. Suppose that the two firms were considering a merger. Would this be beneficial in terms of welfare? Provide economic intuition. [15 marks] c. Suppose that the government decides to partially nationalise firm 1. The presence of the government in the board of firm 1 induces firm 1 to target the joint maximisation of own profits and consumer surplus. Assuming that firm 2 continues to target the maximisation of own profits, derive and describe the equilibrium, and compare it to the equilibrium that you have found in part a. [25 marks]