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please refer to the following attachment (20 mks) Consider an asymmetric Bertrand duopoly given by: q1(PI, p2) = 18 - p1 + 0.5 pz, Ci(qi)

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(20 mks) Consider an asymmetric Bertrand duopoly given by: q1(PI, p2) = 18 - p1 + 0.5 pz, Ci(qi) = 2q1; q2(P1, p2) = 18 + 0.5 p1 - pz, C2(q2) = 4q2. a) Find Bertrand equilibrium; b) Suppose Firm 1 moves first, find Bertrand-Stackelberg equilibrium, and discuss whether firms are better off or worse off in this leader-follower model. (Note that the average and marginal costs are: AC,=MCI = 2, AC2=MC2 =4)

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