Consider a market with inverse demand P(Q) = 100 - Q and two firms with cost function C(q) = 20q.
(a) Find the Stackelberg equilibrium outputs, price and profits (with firm 1 as the leader).
(b) Compute the optimal profits for the firms.
(c) Compare total profits, consumer surplus and social welfare under Stackelberg and Cournot. Are the comparisons intuitively expected?