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There is a duopoly in which companies produce heterogeneous products. The demand functions for companies 1 and 2 are given by Q_1 (P_1,P_2)=85-P_1+P_2 Q_2 (P_1,P_2)=85-P_2+P_1

There is a duopoly in which companies produce heterogeneous products. The demand functions for companies 1 and 2 are given by

Q_1 (P_1,P_2)=85-P_1+P_2

Q_2 (P_1,P_2)=85-P_2+P_1

Suppose that company 1 has a first mover advantage due to superior access to finance. How much should it charge to maximize its profit? What is the optimal price for firm 2?

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