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Suppose that Stark Real Estate (S) and Rogers Properties (R) are competing in a Stackelberg competition, where Rogers Properties (R) gets to move first. All

Suppose that Stark Real Estate (S) and Rogers Properties (R) are competing in a Stackelberg competition, where Rogers Properties (R) gets to move first. All of the information from the Cournot game still applies, including:

  • Demand: P = 52 3Q
    • Q = QS + QR
  • S's marginal costs: MCS = 4
  • R's marginal costs: MCR = 10

What are the Stackelberg equilibrium quantities (QS and QR) and price in this market?

[Hint: What is the revenue function in terms of the quantity that R (Rogers) cares about? Remember that MR = dRev/dQ, or the change in revenue over the change in quantity. If Rev = aQb, then dRev/dQ= abQb-1. Also, Q = Q1, and Q0 = 1]

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