Two firms operate as Stackelberg duopolists.
Market demand is given by P = 60 - Q. Each firm has constant average and marginal cost equal to 10.
Firm 2, the follower, has a best response function given by: q2 = 25 - (1/2)q1, where q2 is the output of Firm 2 and q1 is the output of Firm 1.
What is the Stackelberg output of Firm 1, the leader?
