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So P = A - B[Q1 + Q2] and profit is equal to
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--profit for Firm I is equal to P Qi-C Qi.
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And what we're told to do in backward induction is what?
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First of all, solve things out for Firm 2 taking Firm 1 as given,
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and then go back and solve for Firm 1.
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So exactly the discussion we've just had informally,
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we're now going to do more formally.
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So backward induction tells us,
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solve for Firm 2 first, taking Q1 as given.
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What is that problem?
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It's this sort of boring math problem,
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it says maximize by choosing Q2 the profits of Firm 1,