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Two firms, firm 1 & firm 2, in a Stackelberg sequential duopoly are facing the market...

Two firms, firm 1 & firm 2, in a Stackelberg sequential duopoly are facing the market demand given by P = 140 – 0.4Q, where P is the market price and Q is the market quantity demanded. Firm 1 has (total) cost of production given by C(q1) = 200 + 15q1, where q1 is the quantity produced by firm 1. Firm 2 has (total) cost of production given by C(q2) = 200 + 10q2, where q2 is the quantity produced by firm 2. The firms produce identical product. Firm 1 makes its choice of quantity first and credibly commits to it. Firm 2 observes firm 1’s choice, believes it to be credible, and then choses its own quantity. Find

18. Equilibrium quantity produced by firm 1 in the Cournot-Stackelberg equilibrium.

19. Equilibrium quantity produced by firm 2 in the Cournot-Stackelberg equilibrium.

20. Equilibrium profits earned by firm 1 in the Cournot-Stackelberg equilibrium.

21. Equilibrium profits earned by firm 2 in the Cournot-Stackelberg equilibrium.

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