The inverse demand for a homogeneous-product Stackelberg duopoly isP = 20,000 -4Q. The cost structures for the leader and the follower, respectively, areCL(QL) = 2,000QL andCF (QF) = 4,000QF..
a. What is the follower's reaction function?
QF = - QL
b. Determine the equilibrium output level for both the leader and the follower.
Leader output:
Follower output:
c. Determine the equilibrium market price.
$
d. Determine the profits of the leader and the follower.
Leader profits: $
Follower profits: $