A duopolist..

Consider two duopolists whose profit functions are given by 7 (z1, Z2), i = 1, 2. The variables z1, 22 can represent ANY choice variables. The firms compete in z1 and z2 in a simultaneous move game. (i) When will z1 and z2 be strategic substitutes and when will they be strategic complements? (ii) Define the slope of the best reply function of firm 1 as: dz2 dzi 1 and the slope of the best reply function of firm 2 as: dz2 dz1 12 - d92 dg7 2 (1i) Show which firm's best reply functions is steeper and explain how this is related to the stability of the Nash equilibrium