Question: nverse demand is P = 1 2 0 Q . Firm A has constant marginal cost 2 0 and firm B has constant marginal cost

nverse demand is P =120 Q. Firm A has constant marginal cost 20 and firm B
has constant marginal cost 40.
i. Suppose firm A is the Stackelberg leader. Solve for the equilibrium quantities.
ii. Suppose firm B is the Stackelberg leader. Solve for the equilibrium quantities.
iii. In which of these two situations is market quantity higher?
2

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