Monopoly and Duopoly

4. In 1998, with the introduction of the Mach3 shaving line, Gilette was the only seller of multi-blade razors and multi-blade replacement cartridges. The U.S. annual inverse demand for multi-blade replacement cartridges was given by = 1300 2, where P is measured in cents per cartridge and Q in millions of cartridges. Gilette incurs a constant marginal cost of $1 [use 100 cents] for each cartridge supplied.

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In 2004, Schick entered the market for multi-blade razors with its Quattro shaving line and since then it has competed with Gilette a-la Cournot. Assume that, in 2004, the inverse demand for multi-blade replacement cartridges was still given by = 1300 2, and that Gilette and Schick had the same cost structure (that is, both of them had a marginal cost of $1, or 100 cents).

c. What was Gilette's reaction function? Illustrate Gilette's reaction function on a graph in which you place Gilette's quantity on the x-axis, and Schick's quantity on the y-axis.

d. Explain in words the meaning of the two intercepts of Gilette's reaction function. [In answering this question you are not allowed to use any math, any number, the words "anything," or "nothing", or any of their synonyms]