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The inverse demand for a homogeneous-product Stackelberg duopoly is P = 10,000 -5 Q. The cost structures for the leader and the follower, respectively, are
The inverse demand for a homogeneous-product Stackelberg duopoly isP= 10,000 -5Q.The cost structures for the leader and the follower, respectively, areCL(QL) = 3,000QLandCF(QF) = 5,000QF..
a. What is the follower's reaction function?
QF=-QL
b. Determine the equilibrium output level for both the leader and the follower.
Leader output:
Follower output:
c. Determine the equilibrium market price.
$
d. Determine the profits of the leader and the follower.
Leader profits: $
Follower profits: $
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