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You are a duopolist producer of a homogeneous good. Both you and your competitior have zero marginal costs.
Dear tutor, please answer the following question:1. You are a duopolist producer of a homogeneous good. Both you and your competitior have zero marginal costs. The market demand curve is P = 60 – Q, where Q = Q1 + Q2 x Q1 is your output and Q2 is the output of your competitor. (a) (2 marks) Please find the equilibrium outputs in a Cournot game. Please calculate the profits of the two firms. (b) (2 marks) Please find the equilibrium outputs in a Stackelberg game where you are the first mover and your competitor is the second mover. Please calculate the profits of the two firms. (c) (1 mark) Do you identify a first-mover advantage?Thank you.
Ans 1. Given in the question,MC1 =MC2 = 0P = 60-q where Q = q1 + q2 q1 is output of firm 1q2 is output of firm 2 (a) COURNOT GAME Since marginal cost is zero, the profit function for Firm 1 is...