Question
Consider the Stackleberg Model with price competition where there are 2 firms, Firm 1 and Firm 2. Suppose the products are differentiated as in the
Consider the Stackleberg Model with price competition where there are 2 firms, Firm 1 and Firm 2. Suppose the products are differentiated as in the spatial model. Each firm has total cost function TC(q)=q. The travel cost is equal to 1.
Firm 1 can set and commit to its price first. The game has perfect and complete information. What will be the price of each firm and their profits?
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Principles Of Economics
Authors: Robert H. Frank, Ben Bernanke Professor, Kate Antonovics, Ori Heffetz
6th Edition
0078021855, 9780078021855
