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Q2 Duopolist firms simultaneously produce quantities q, and q2. They jointly face a market demand that determines the price based on their quantity choices: p
Q2 Duopolist firms simultaneously produce quantities q, and q2. They jointly face a market demand that determines the price based on their quantity choices: p = 20 - q1 - q2. Firm l's cost function is c1 (q1) = 2q1, and firm 2's cost function is c2(92) = 4q2. a. Construct the best response functions for firm 1 and firm 2. b. Find all NE. Now firm 1 produces first, firm 2 observes q1, and then firm 2 chooses q2. c. Find all SPNE. d. Construct a NE that isn't subgame-perfect where firm 1 produces q1 = 0, i.e., does not enter the market at all
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