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Consider the following sequential Cournot game. There are two firms, 1 and 2, that can produce any positive amount of the good at zero marginal
Consider the following sequential Cournot game. There are two firms, 1 and 2, that can produce any positive amount of the good at zero marginal cost and a 1 i if q, > 0 fixed cost F = E' That is, their cost function is Ciq, = 0' if (ii = 0 i = 1,2 Firms set their quantities sequentially. First, firm 1 sets ql. Second, after learning 9'1. firm 2 sets qz. The price is fixed according to the linear inverse demand function, p = g q1 qz. Each firm maximizes its profits. Compute the unique subgame perfect Nash equilibrium
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