Consider two duopolists whose cost functions are Ci = 10qi, i = 1, 2, where Ci and qi are their costs and outputs, respectively. The two duopolists have identical products and face a market demand function: p = 40 - 2q, where q = q1 + q1.
Assume that one of them can choose her output first. Find the sequential Nash equilibrium (leader/follower) outputs and profits.