Consider two firms, i = 1; 2, producing differentiated products and engaged in Cournot
a. Given the market demands, what are the best-response functions of the two firms?
b. Draw the best-response functions both for complements (d < 0) and substitutes (d > 0).
c. Compute the Cournot equilibrium quantities and prices in this market.
d. Compare the outcome between substitutes and complements goods.
e. What are the profit-maximizing quantities and prices if firm i is a monopolist in this market? Compare with part c.