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Suppose that Stark Real Estate (S) and Rogers Properties (R) are competing in a Stackelberg competition, where Rogers Properties (R) gets to move first. All of the information from the Cournot game still applies, including:
-Demand: P = 52 - 3Q
-Q = QS + QR
-S's marginal costs: MCS = 4
-R's marginal costs: MCR = 10
What are the Stackelberg equilibrium quantities (QS and QR) and price in this market?
[Hint: What is the revenue function in terms of the quantity that R (Rogers) cares about? Remember that MR = dRev/dQ, or the change in revenue over the change in quantity. If Rev = aQb, then dRev/dQ= abQb-1. Also, Q = Q1, and Q0 = 1]
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