Two firms compete for consumers who have aggregate demand x=100-2P. Both firms have constant marginal cost, with MC1=1 and MC2 equal to some constant C>1.
a.)Using Bertrand price competition, illustrate both firms' best response functions & indicate what the outcome is for each firms' production and profit.
b.)Using Cournot quantity competion, illustrate both firms' best response functions.
c.)Suppose firm 2 moves first and firm 1 moves second, as in the Stackelberg model. What is the highest value of c such that firm 2 has more profits than firm 1?