Consider two duopolist with differentiated products, who compete in prices. Their demand and cost functions are given by q₁ = 2 - 2p₁ + p_{2 ;} q₂ = 2 2p₂ + p_{1 ,} C_i = q_i, where q_i and p_i are their quantities and

prices.

i. Compare the simultaneous move Nash equilibrium solution with

the sequential one (leader/follower).

ii. What happens if they both act as

leaders?

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