Find the subgame perfect nash equilibrium

Reference no: EM13183315

Asymmetric Stackelbergy Duopoly

Consider the basic Stackelberg model. However, now there are two firms competing to produce a ho-mogeneous product with asymmetric costs c1; c2 with c1 < c2. Further, they face the demand function
P(Q) = \(\alpha\) - Q with Q = q1 + q2. Assume \(\alpha\) > c2.
(a) Find the Subgame Perfect Nash Equilibrium where rm 1 chooses its quantity in the rst stage, then in the second stage rm 2 makes its quantity choice. Find the equilibrium quantities, price, and prots. Which rm produces more in equilibrium?
(b) Find the Subgame Perfect Nash Equilibrium where rm 2 chooses its quantity in the rst stage, then in the second stage rm 1 makes its quantity choice. Find the equilibrium quantities, price, and prots. Which rm produces more in equilibrium?

Reference no: EM13183315

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