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2. There are two firms operating in a market with demand P = 10 Q. Firm 1 is the leader and will choose its quantity,
2. There are two firms operating in a market with demand P = 10 Q. Firm 1 is the "leader\" and will choose its quantity, q1, first. Firm 2 is the "follower\" and will choose its quantity, qz, second, after having observed the leader's choice. The leader's costs are 2m and the follower's costs are 2q2. Both firms will be choosing their quantities to maximise their respective profits. a) Derive the follower's reaction function. b) Find the m and q2 chosen in the subgame perfect Nash equilibrium ofthis game
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