Consider a Stackelberg game of quantity competition between two firms. Firm 1 is the leader and firm 2 is the follower. Market demand is described by the inverse demand function P=1000-4Q. Each firm has a constant unit cost of production equal to 20. Suppose firm 2's unit cost of production is c<20. What value would c have so that in the Nash Equilibrium, the two firms, the leader and the follower, had the same market share?

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Consider a Stackelberg game of quantity competition between two firms. Firm 1
is the leader and firm 2 is the follower. Market demand is described by the
inverse demand function P=1000-4Q. Each firm has a constant unit cost of
production equal to 20. Suppose firm 2's unit cost of production is c<20. What
value would c have so that in the Nash Equilibrium, the two firms, the leader and
the follower, had the same market share?
Transcribed Image Text:Consider a Stackelberg game of quantity competition between two firms. Firm 1 is the leader and firm 2 is the follower. Market demand is described by the inverse demand function P=1000-4Q. Each firm has a constant unit cost of production equal to 20. Suppose firm 2's unit cost of production is c<20. What value would c have so that in the Nash Equilibrium, the two firms, the leader and the follower, had the same market share?
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