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Solve for the subgame perfect equilibrium

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Reference no: EM133131605

Consider a Stackelberg game of quantity competition between two ?rms. Firm 1 is the leader and ?rm 2 is the follower. Market demand is described by the inverse demand P=1000-4Q. Each ?rm has a constant unit cost of production equal to 20.

A. Solve for the Subgame perfect equilibrium.

B. Suppose firm 2's unit cost of production is 20. Is it possible that in equilibrium, the two ?rms had the same market share?

Reference no: EM133131605

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