Question
Consider the following Stackelberg game. Suppose there are now 2 competing parks in West Anderson: Benson's Park and Pops' Park. Benson and Pops compete in
Consider the following Stackelberg game. Suppose there are now 2 competing parks in West Anderson: Benson's Park and Pops' Park. Benson and Pops compete in a duopoly market with a demand curve given by P=200 - 4QB- 4QP. Benson's cost function is C(QB)=50+8QB and Pops' cost function is C(QP)=50+8QP. Benson chooses a quantity of tickets first, and Pops second. a. Write down Pops' profit function. (1 points) b. Find Pops' reaction function. (3 points) c. Write down Benson's profit function, taking into account Pops' reaction function. (3 points) d. Find the equilibrium quantities chosen by Benson and Pops. (4 points) e. Calculate the profits earned by Benson and Pops. Does one make more profit than the other? Explain your answer. (3 points)
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