2 Suppose instead that firm 1 was the Stackelberg leader in this market. Rewrite firm 1s profit...

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2 Suppose instead that firm 1 was the Stackelberg leader in this market. Rewrite firm 1’s profit function, using firm 2’s reaction function, and solve for the Stackelberg equilibrium. Once you’ve solved for the equilibrium market price and total market demand, you should be able to tell whether consumer surplus has increased or decreased.

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Managerial Economics

ISBN: 9780415272889

1st Edition

Authors: Tim Fisher , Robert Waschik

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