Suppose the market demand for a homogeneous product is given by Q = a - bP, where a and b are positive constants. The product is supplied by a dominant firm with a constant marginal cost c > 0 and n competitive fringe firms, each of which has a cost function ci(qi) = (qi^2)/(2ki) for i = 1, ... , n, where ki > 0 is a parameter. Suppose the dominant firm moves first by setting a
a). Compute the
b). How does the presence of competitive fringe firms affect the equilibrium price, as compared to the
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