Consider a Cournot duopoly model, where two firms compete by providing identical goods. The demand for the good is given by P(q; q2) = 20 – 2q1 – 2q2. The marginal cost of firm 1 is a constant $2 per...

Extracted text: Consider a Cournot duopoly model, where two firms compete by providing identical goods. The demand for the good is given by P(q; q2) = 20 – 2q1 – 2q2. The marginal cost of firm 1 is a constant $2 per unit. The marginal cost of firm 2 is private information. Firm 1 believes firm 2's marginal cost is $2 with probability 1/2 and $4 with probability 1/2. Find the Bayes' Nash equilibrium of the game. What is the quantity supplied by firm 1? Numerical answer