Question

The market demand function is Q=10,000-1,000p.

Each firm has a marginal cost of m=$0.16. Firm 1, the leader, acts before Firm 2, the follower. Solve for the Stackelberg-Nash equilibrium quantities, prices, and profits. Compare your solution to the Cournot-Nash equilibrium.

The Stackelberg-Nash equilibrium quantities are:

q1=___________ units

and q2=____________units

The Stackelberg-Nash equilibrium price is:

p=$_____________

Profits for the firms are

profit1=$_______________

and profit2=$_______________

The Cournot-Nash equilibrium quantities are:

q1=______________units

and q2=______________units

The Cournot-Nash equilibrium price is:

p=$______________

Profits for the firms are

profit1=$_____________

and profit2=$_______________

Answer 1