Consider a Stackelberg duopoly. Firm 1 chooses output q1. Firm 2 observes q1 and then chooses g2. In a subgame perfect equilibriuma. Neither firm plays a best response to the other firm's quantityO b. Firm 1 plays a best response to 92, and Firm 2 plays a best response to q1C. Firm 1 plays a best response to q2, but Firm 2 does not generally play a best response to q1O d. Firm 2 plays a best response to q1, but Firm 1 does not generally play a best response to 92

B.Firm 1 place paste response to q2, and firm to place best response to q1

. Neither firm plays a best response to the other firm's quantity . Firm 1 plays a best response to q2. and Firm 2 plays a best response to Firm 1 plays a best response to q2. but Firm 2 does not generally play a d. Firm 2 plays a best response to 91.- but Firm 1 does not generally play a

. Neither firm plays a best response to the other firm's quantity . Firm 1 plays a best response to q2. and Firm 2 plays a best response to Firm 1 plays a best response to q2. but Firm 2 does not generally play a d. Firm 2 plays a best response to 91.- but Firm 1 does not generally play a

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Consider a Stackelberg duopoly. Firm 1 chooses output q1. Firm 2 observes q1 and then chooses g2. In a subgame perfect equilibrium
a. Neither firm plays a best response to the other firm's quantity
O b. Firm 1 plays a best response to 92, and Firm 2 plays a best response to q1
C. Firm 1 plays a best response to q2, but Firm 2 does not generally play a best response to q1
O d. Firm 2 plays a best response to q1, but Firm 1 does not generally play a best response to 92

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