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In a duopoly setting, compare and rank price, firms’ quantity choices, total industry output and profits...

In a duopoly setting, compare and rank price, firms’ quantity choices, total industry output and profits when firms choose quantities simultaneously (Cournot) versus sequentially (Stackelberg), assuming identical industry demand and symmetric costs in both simultaneous and sequential interaction scenarios.

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Answer #1

In Cournot, the output level of second firm is greater than the output level of firm 2 (stackelberg Follower) in Stackelberg game.

On ther other hand, Leader's output (Firm 1) in stackelberg game > Firm 1 output in Cournot.

Total Industry Output in Cournot < Total Industry Output in Stackelberg

Leader's profit in Stackelberg > Profit of firm 1 in cournot

Profit of firm 2 in Cournot > Profit of firm 1 in Stackelberg game.

Industry Profits are higher in Cournot Game

Consumer Surplus in Stackelberg > Consumer Surplus in Cournot

Price charged in Cournot Game > Price charged in Stackelberg

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