Two firms have a production technology involving a fixed cost and constant marginal cost, as represented by

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Two firms have a production technology involving a fixed cost and constant marginal cost, as represented by the cost function:

TCi(f t) = {f +C| * *« > 0 . i =1, 2 1^0 if<7¿=0 Analyze the von Stackelberg equilibrium when firm 1 is the leader and the two firms compete on quantities.

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