Purchase Solution

Stackelberg Duopoly

Not what you're looking for?

Ask Custom Question

11. The inverse demand curve for a Stackelberg duopoly is . The leader's cost structure is . The follower's cost structure is .
a. Determine the reaction function for the follower.
b. Determine the equilibrium output levels for both the leader and the follower.
c. What are the profits for the leader? For the follower?

Purchase this Solution

Solution Summary

The expert determines the reaction function for the follwer. Stackelberg Duopoly demand curve is examined.

Solution Preview

first we write down the profit functions for both firms (remember profit = revenue-cost = price X sales quantity - cost; and price = 10000-6Q = 10000 - 6Ql - 6Qf, because total quantity = leader's quantity + follower's quantity)

leader's profit = (10000-6Ql - 6Qf)Ql - 15Ql = 10000Ql - 6Ql^2 - 6QlQf - 15Ql

take the ...

Purchase this Solution


Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.