Question
There are two bakers, Anderson and Carlson. Anderson's pitas taste just like Carlson's nobody can tell the difference. Anderson has constant marginal costs of R1
There are two bakers, Anderson and Carlson. Anderson's pitas taste just like Carlson's nobody can tell the difference. Anderson has constant marginal costs of R1 per pita. Carlson has constant marginal costs of R2 per pita. Fixed costs are zero for both of them. The inverse demand function for pita in town is p(q) = 6 0.01q, where q is the total number of pitas sold by both Anderson and Carlson per day. 3.2.1 Find the Stackelberg equilibrium and profits if Carlson produces first. Show all calculations and provide a brief description of the economic theory applied.
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