Assume that firm 1 is acting as a Stackelberg leader and firm 2 is acting as the Stackelberg follower. The demand function is still P=120-4Q as part A. The firms do not collude and the firms have identical marginal cost functions (MC1=MC2=20). Determine:

(a) the demand function faced by the leader:

.

(b) the quantity produced by the leader:

.

(c) the quantity produced by the follower:

and

(d) market price:

Now assume these firms are acting like Bertrand duopolists. What quantity will each firm produce and what will be the market price?

Quantity for firm 1 and 2:

Market price: $