Consider two duopolies with differentiated products, who compete in prices. Their demand and cost functions are given by q₁ = 2 - 2p₁ + p_{2 and} q₂ = 2 2p₂ + p_{1 .} Their cost is given by C_i = q_{i :}

where q_i and p_i are their quantities and prices.

i.Compare the simultaneous move Nash equilibrium solution (for prices and profits) with the sequential one (leader/follower)?

ii.What happens if they both act as leaders?

iii.Compare the simultaneous move Nash equilibrium solution (for prices and profits) with the cooperative solution?

iv.Given the cooperative solution prices, does it pays the two firms to break the agreement? Explain.