There are two firms, 1 and 2, in an industry. Patent protection ensures that the two firms will operate as a duopoly for the foreseeable future. The cost functions of the two firms are given by C1(q1) = 60 + 30q1 and C2(q2) = 30 + 36q2. The firms face a linear market demand curve P(Q) = 150 15Q where Q = q1 + q2 denotes the total output level. [1] Find (and draw) the firms' reaction (best response) curves and find (and show) the Nash equilibrium of the Cournot game when the firms compete simultaneously. What is each firm's equilibrium output and profit in the Cournot model?

Compare the equilibrium outputs and profits from part [1] with the equilibrium outputs and profits of Stackelberg's duopoly game (firm 1 moves first and firm 2 moves second).