industry and plays Cournot.What are the equilibrium values of Qg. and P?What are each firm's profits? To determine the Cournot-Nash we first caleulate the πg-(00-Qe-0o)2e-00e+0.50)-900e-1.50-00o The change in profit with respect to is OTE=90-3QE-QD OQg ne Ev 90-3Qg-QD =0,or g=90-2 3 Because Dimlit has the same cost structure,Dimlit's reaction function is 0=90-g 3 Substituting for Qp in the reaction function for Everglow,and solving for Qg: 90-90-9 3 2=- 3 30,=90-30+g 0=22.5. By symmetry,Qp=22.5,and total industry output is 45. Substituting industry output into the demand equation gives P: 45=100-P,orP=$55 Substituting total industry output and P into the profit function: Π，=22.5*55-(10*22.5+0.5*22.5*22.5)=$759.375 million. c.Suppose the Everglow manager cor gu ectly that Dimlit has a courno Stackelb and ?What are each fir rg pro the 、What libr m values of Qg.Qp.a Recall Everglow's profit function: πE=(00-Q-Q)Q-0Q+0.5g) industry and plays Cournot. What are the equilibrium values of QE, QD, and P? What are each firm’s profits? To determine the Cournot-Nash equilibrium, we first calculate the reaction function for each firm, then solve for price, quantity, and profit. Profits for Everglow are equal to TRE - TCE, or  E = 100 − QE − QD ( )QE − 10QE + 0.5QE 2 ( )= 90QE − 1.5QE 2 − QEQD . The change in profit with respect to QE is   − −  E E E D Q = 90 3Q Q . To determine Everglow’s reaction function, set the change in profits with respect to QE equal to 0 and solve for QE: 90 - 3QE - QD = 0, or QE = 90 − QD 3 . Because Dimlit has the same cost structure, Dimlit’s reaction function is QD = 90 −QE 3 . Substituting for QD in the reaction function for Everglow, and solving for QE: QE = 90 − 90 − QE 3 3 3QE = 90 − 30 + QE 3 QE = 22.5. By symmetry, QD = 22.5, and total industry output is 45. Substituting industry output into the demand equation gives P: 45 = 100 - P, or P = $55. Substituting total industry output and P into the profit function: i = 22.5* 55− (10 * 22.5+ 0.5 * 22.5* 22.5) = $759.375 million. c. Suppose the Everglow manager guesses correctly that Dimlit has a Cournot conjectural variation, so Everglow plays Stackelberg. What are the equilibrium values of QE, QD, and P? What are each firm’s profits? Recall Everglow’s profit function:  E = 100 − QE − QD ( ) QE − 10QE + 0.5QE 2 ( )