Exercise 59.2 (Cournot’s duopoly game with linear inverse demandand a
xed cost) Find the Nash equilibrium of Cournot’s game when thereare two rms, the
inverse demand function is given by equation (56.2), and the costfunction of each rm
i is given by

where c > 0, f > 0, and c < a. (Note that the xed cost f aects only the rm’s decision
of whether to operate; it does not a ect the output a rm wishes toproduce if it wishes
to operate.)