Suppose that firm 1 announces a price in the Bertrand model with demand functions where 1 ≥ b…

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Suppose that firm 1 announces a price in the Bertrand model with demand functions

where 1 ≥ b > 0. Assume the firms have unit costs of production c1,c2. Construct the Stackelberg model; firm 2 should find the best response p2 = p2( p1) to maximize u2( p1, p2) and then firm 1 should choose p1 to maximize u1( p1, p2( p1)). Find the equilibrium prices and profits. What is the result when
 = 100,c 1 = 5,c 2 = 1, b = 1/2?