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All question are with regards to the following set up. There are two rms A and B. Firms compete in a Cournot Duopoly in Karhide.
All question are with regards to the following set up. There are two rms A and B. Firms compete in a Cournot Duopoly in Karhide. They set quantities (IA and (33. Inverse demand is POIA + q3) = 18 qA (LB and costs are 0(q) = 3 a: q for both rms. Firm B is a domestic rm (in Karhide,) and rm A is a foreign rm (from Orgoreyn.) The government of Karhide engages in a strategic trade intervention by giving rm B a per unit subsidy of .9. (That is, when rm B produces and sells (13 units, rm B receives a payment of s a: QB from the government.) You must show your work at each step, unless the questions is followed by \"No work required.\
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