Question

Suppose the inverse market demand curve for widgets is given by p = 12 – 2Q, and the market is characterized by Stackelberg duopoly. Both firms have marginal costs of 2 and fixed costs of 0. What is the equilibrium price in the market? Your answer should be rounded to the first decimal place (e.g. 123.4).  

Answer 1

Under Stackelberg duopoly oue Hum mouer first and second will follow it so we are assuming that firm , mover. first and firm a focows the firm, Therefore firm, is leader and from a is follower Profit of firm a T2 = = 2 P22 - 192 (12 - 2099,- 222 = 1292 - 222121 + 222 - 222 = 1022 - 28221 - 222 - 10 - 22, -422 put ata = 0 022 10 221 4 22 = 0 10- 22 = 492 092 P2, cal 112-20) 21 - 221 122, - 221 (21+22) -29, = 1021 - 29?, - 29,22 put 22 = &- 21 in profit of firm ,

Ti = __102) - 293, 2에 톰 -월) = 102 - 29로 594 오로 a . 이외 - put 5 . 오 5 - 231 diti - o da, 522) 20 오2 들길들) ! AAN 여 21t2 = 틀 +득 뿜 P 12-28 | 2 12 - 2(1) = 12 - '들 24일 = 을 2415 - 5