Assume that two firms produce steel. Inverse demand function for steel is given by P = 1 Q. Marginal cost, c, is the same for each firm and
equal 0 for simplicity.
(a) Calculate the Cournot-Nash equilibrium outputs of steel for each firm.
(b) Assume that firm #1 is the Leader. For this firm, calculate von Stackelberg profit maximizing level of output. Calculate the market price in von Stackelberg equilibrium and compare it to the Cournot-Nash equilibrium price.