The interpretation of this strategy is that the firms split monopoly profits and revert to stackelberg equilibrium if there is any deviation. The details of the split are parameterized by of. The higher of the larger firm 1's share of the profit. We may need an unequal split because firm 1 and firm 2 are not symmetric (firm 1 chooses quantity first). We will try to find of such that this candidate equilibrium requires the smallest & to be sustained, i.e. requires the least patience from the players. (b) If firm I were to deviate what quantity would he choose and what would be his profits from such a deviation (remember that the strategy includes firm 2 best responding to any such deviation before firm 1 realizes any profits from it). (c) What is the condition on of so that firm 1 does not want to deviate. Does this depend on 6? (d) Now consider firm 2's incentives. If firm 2 deviates, they should play a best response to qi. If they deviate, in the rest of the following periods they will get second mover Stackelberg payoffs. I am telling you that the minimum required discount factor for firm 2 to have no incentive to deviate is increasing in qi. This is intuitive, firm 2 finds deviation less appealing if it is given a larger share of the monopoly quantity in the cooperation phase (but involves a slightly ugly calculation). Given this information, and your answers to the previous questions, and the fact that firm 1 and 2 share a common discount factor, what is the of that makes cooperation sustainable under the largest range of discount factors. (e) Does such a of from the previous part involve a split that is favorable to firm 1, firm 2, or even. Why might firm 1 be easier to keep in check in the repeated Stackelberg despite having a more favorable punishment payoff compared to firm 2. (f) Calculate the discount factor required to sustain cooperation under the q; from your previous answer. (g) Compare the required discount factor to sustain cooperation in Stackelberg in the previous question vs. that in Cournot. What is the intuition for why this comparison arises