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(Solved): The Market Demand Curve For A Pair Of Duopolists Is Given As P=50- 2Q Where Q= Q1 + Q2. The Constan...

The market demand curve for a pair of duopolists is given as P=50- 2Q where Q= Q1+ Q2. The constant per unit marginal cost is 7 for firm 1 and 5 for firm 2. Both firms also have no fixed costs. Find the equilibrium price, quantity and profit for each firm if firm 1 is the Stackelberg leader and firm 2 a follower. Now re-do the computations assuming that firm 2 is the leader and firm 1 the follower.

(a) Firm 1 is leader

Equilibrium Price:

Equilibrium Quantity for Firm 1:

Equilibrium Quantity for Firm 2:

Profit for firm 1:

Profit for firm 2:

(b) Firm 2 is leader       

Equilibrium Price:

Equilibrium Quantity for Firm 1:

Equilibrium Quantity for Firm 2:

Profit for firm 1:

Profit for firm 2:



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