Suppose Firm 1 in Country 1 produces Good 1 and Firm 2 in Country 2 produces Good 2.

Both goods are sold only to consumers in other countries. The demand curves for the two goods are 4 = 15-2p+P2 92 = 15+ P - 2p2 Calculate the Bertrand equilibrium assuming that mar- ginal cost is zero. Now suppose that Country 1 and Country 2 each place a $3 export tax on their domestic firms. What are the new equilibrium prices and profits for Firms 1 and 2?