Question
Leon and Francis are two brothers who have both independently developed an innovative charging station for mobile devices. In this market, there are no other
Leon and Francis are two brothers who have both independently developed an innovative charging station for mobile devices. In this market, there are no other competitors. For their first year of trading, they compete over quantity with each brother reacting to the quantity the other brother produces. At the end of the year, Leon and Francis decide to work together and both agree to produce 2,500 charging stations each per month. However, at the end of July the following year, Leon notices that Francis has actually produced 3,000 charging stations. With the aid of an appropriate diagram explain:
(a)Why the brothers agreed to work together.
(b)Why Francis produced more charging stations than the volume he had agreed with Leon.
(c)What Francis can do about his brother's decision to produce more charging stations than they had jointly agreed.
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