stakelberg equilibrium numerical | stakelberg competition | duopoly model скачать в хорошем качестве

stakelberg equilibrium numerical | stakelberg competition | duopoly model

in this video we will solve a numerical Question on stakelberg competition. the question is: Consider a doopoly in which firms choose quantities. The market demand function is given by P= 280-2Q where Q= Q1+Q2, Q1 & Q2 are outputs of firm 1 and firm 2 respectively. each firm has a Marginal cost of $40. (1) Find Stakelberg equilibrium when firm 1 acts as leader. Find market price at stakelberg equillibatum and corresponding profits for each flam . to solve this question, first we need to find out the reaction curves of firm 1 and firm 2. after that we insert the reaction function of firm 2 into total revenue function of firm 1, since firm 1 is leader. the we apply profit maximization condition for firm 1 and find out the equilibrium quantity produced by firm 1. to find out the equilibrium quantity of firm 2, we simply plug the equilibrium quantity of firm 1 in reaction function of firm 2. there after we find out equilibrium price by inserting the equilibrium quantities of firm 1 and firm 2 into market demand function. likewise we insert the equilibrium quantities of firm 1 and firm 2 in their respective profit functions to get profit for each firm.