3. (Vertical Merger) Suppose that the market demand for a product is given by Q = 1 P. A manufacturer (M) produces such a product at zero cost and sells it to a retailer at a wholesale price w. The retailer (R) then sells the product to consumers at a retail price P. There is no retail cost. (a) Determine the equilibrium outcome (prices, quantities and prots) of the sequentialmove game in which the M moves rst and the R moves next. (b) Suppose the M and R merge. Determine the optimal price and quantity as well as the total profits. (c) Compare the above two settings and discuss your findings