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Consider an oligopoly with 2 firms, each with constant marginal cost and no fixed costs. Firm 1 has marginal cost 1, while firm 2 has

Consider an oligopoly with 2 firms, each with constant marginal cost and no fixed costs. Firm 1 has marginal cost 1, while firm 2 has marginal cost 2. The market demand is P = 6 - 0.1Q. The firms compete by picking quantities, and this game is repeated indefinitely. Both firms have discount factor . a) Find each firm's profit from the one-period Cournot outcome (1 , 2 ).

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