Suppose now that the initial incumbent can perfectly imitate the new technology, and hence it can produce at the same marginal cost faced by its rival (firm N). The two (here symmetric) firms compete in prices.

Find the Bertrand equilibrium and compare it with the one you have found at point b), focusing on firms' and industry profits, consumer surplus, total surplus.

Would firm N ever invest in research in order to develop the new technology if it anticipates perfect imitation by firm I and hence the post-entry equilibrium outcome of point d) instead of the post-entry equilibrium outcome you have found at point b)? Comment on your answer.