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Suppose that there is a duopoly of two firms (Firm 1 and Firm 2) that faces an industry demand P=50-Q where Q = q1 +
Suppose that there is a duopoly of two firms (Firm 1 and Firm 2) that faces an industry demand P=50-Q where Q = q1 + q2 is the total industry output. Assume the costs incurred by each firm are 0. Find the quantity produced by each firm in the leader-follower problem assuming Firm 1 is the leader and Firm 2 is the follower (also called as Stackelberg model equilibrium). ii. Find the quantity produced by each firm assuming both firms 1 and 2 choose their quantities simultaneously (also called as Cournot equilibrium)
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