4.1 Sequential price-setting with differentiated products Consider a market with two horizontally differentiated products and inverse demands given by Pi(qi, q;) = a - bq; - dq;. Set b = 2/3 and d = 1/3. The system of demands is then given by @:(pi, p;) = a - 2p; + p;. Suppose that firm I has cost c, = 0 and firm 2 has cost C2 = c (with 7c