The big airplane frame industry is a duopoly. The two firms, Boeing and Airbus, compete through Cournot quantity-setting competition. The demand curve for the industry is P = 100 - Q, where Q is the total quantity produced by Boeing and Airbus. Currently, each firm has marginal cost of $60 and no fixed cost.

a) What is the equilibrium price, quantity, and profit for each firm? (25 marks)

b) Boeing is considering implementing a proprietary technology with a one-time sunk cost of $200. Once this investment is made, marginal cost will be reduced to $40. Airbus has no access to this or any other cost-saving technology, and its marginal cost will remain at $60. Should Boeing invest in the new technology? (Hint: You must compute another Cournot equilibrium). (25 marks)