Again with the Bertrand oligopoly of Question 6, consider a VER in which Foreign limits the F firm's exports to be no greater than they were under free trade. Use the Stackelberg leader interpretation of how a VER works in this case.
(a) Analyze the effect on both firms' sales and profits, as well as consumer surplus.
(b) Is this a policy that the F firm would like? Would the Foreign government like to continue this policy even if the Home government was not demanding it? Explain.