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Stackelberg oligopoly The inverse demand function for a homogeneous-product Stackelberg duopoly is P(Q) = 14, 000 - 2Q. The cost structures for the leader and

Stackelberg oligopoly

The inverse demand function for a homogeneous-product Stackelberg duopoly is P(Q) = 14, 000 - 2Q. The cost structures for the leader and follower, respectively, are CE(QL) =

2,000Q L and CF (QF) = 4, 000Q F.

  1. Derive expressions for the follower's best response function.
  2. Calculate the equilibrium output level for both the leader and the follower in this duopoly.
  3. Calculate the equilibrium market price.
  4. What are the profits for the leader and follower in this equilibrium?

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