Statistics Solutions

(See Steps) The inverse demand curve for a Stackelberg duopoly is P=10,000-6Q. The leader’s cost structure is C_L(Q_L)=15Q_L. The follower’s cost structure

Question: The inverse demand curve for a Stackelberg duopoly is \[P=10,000-6Q\] . The leader’s cost structure is \[{{C}_{L}}\left( {{Q}_{L}} \right)=15{{Q}_{L}}\] . The follower’s cost structure is \[{{C}_{F}}\left( {{Q}_{F}} \right)=25{{Q}_{F}}\] .

  1. Determine the reaction function for the follower.
  2. Determine the equilibrium output levels for both the leader and the follower.
  3. What are the profits for the leader? For the follower?

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