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