In our Cournot-Stackelberg duopoly game of export subsidy, which of the following is CORRECT? a. Suppose the Home government offers its optimal positive sH for its Home firm given that the Foreign government has no subsidy for its Foreign firm. The Foreign government will respond to this sH > 0 by offering its own SF to its Foreign firm and the Home government will respond by further increasing its SH to its Home firm. b. Consumers of the product will support both the Home and Foreign governments in their decision to subsidize their own firms. In fact, for the consumers, the higher the subsidy, the better off they are. C. For the world as a whole, including the firms and the consumers, the subsidy game will result in over-production, over-consumption will respond to this sH > 0 by offering its own SF to its Foreign firm and the Home government will respond by further increasing its sH to its Home firm. b. Consumers of the product will support both the Home and Foreign governments in their decision to subsidize their own firms. In fact, for the consumers, the higher the subsidy, the better off they are. C. For the world as a whole, including the firms and the consumers, the subsidy game will result in over-production, over-consumption and a drop in the world's total surplus. Hence, both countries practicing free trade is the best outcome for the world as a whole. d. All of the answers above are correct. In our Cournot-Stackelberg duopoly game of export subsidy, which of the following is CORRECT? a. Suppose the Home government offers its optimal positive sH for its Home firm given that the Foreign government has no subsidy for its Foreign firm. The Foreign government will respond to this sH > 0 by offering its own SF to its Foreign firm and the Home government will respond by further increasing its SH to its Home firm. b. Consumers of the product will support both the Home and Foreign governments in their decision to subsidize their own firms. In fact, for the consumers, the higher the subsidy, the better off they are. C. For the world as a whole, including the firms and the consumers, the subsidy game will result in over-production, over-consumption will respond to this sH > 0 by offering its own SF to its Foreign firm and the Home government will respond by further increasing its sH to its Home firm. b. Consumers of the product will support both the Home and Foreign governments in their decision to subsidize their own firms. In fact, for the consumers, the higher the subsidy, the better off they are. C. For the world as a whole, including the firms and the consumers, the subsidy game will result in over-production, over-consumption and a drop in the world's total surplus. Hence, both countries practicing free trade is the best outcome for the world as a whole. d. All of the answers above are correct