Question: 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 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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First we determine the NashCournot equilibrium The inverse demand curve is p 1 0001 Q The first firm... View full answer

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