▁stay ▁out ▁of ▁the ▁market ▁itself , ▁since ▁otherwise ▁it ▁would ▁in cur ▁a ▁loss . ▁ ▁From ▁the ▁point ▁of ▁view ▁of ▁the ▁domestic ▁country , ▁the ▁subs id y ▁is ▁w elf are ▁impro ving . ▁The ▁ 2 0 ▁million ▁subs id y ▁is ▁a ▁transfer ▁from ▁the ▁government ▁to ▁the ▁firm ▁hence ▁it ▁has ▁no ▁effect ▁on ▁national ▁w elf are ▁( ign oring ▁costs ▁of ▁tax ation ; ▁as ▁long ▁as ▁these ▁are ▁not ▁too ▁large ▁the ▁basic ▁insight ▁of ▁the ▁model ▁goes ▁through ). ▁Additionally ▁the ▁domestic ▁firm ▁g ains ▁ 5 0 ▁million ▁which ▁would ▁have ▁otherwise ▁gone ▁to ▁the ▁foreign ▁firm . ▁ ▁Stack el berg – C our not ▁version ▁ ▁The ▁original ▁Br ander ▁and ▁Sp encer ▁paper ▁presented ▁the ▁game ▁in ▁the ▁framework ▁of ▁a ▁Cour not ▁competition ▁model . ▁ ▁Let ting ▁x ▁denote ▁the ▁output ▁of ▁the ▁domestic ▁firm ▁and ▁y ▁denote ▁the ▁output ▁of ▁the ▁foreign ▁firm , ▁the ▁inverse ▁demand ▁function ▁( price ▁as ▁a ▁function ▁of ▁total ▁quantity ) ▁is ▁given ▁by ▁. ▁Hence ▁the ▁profit ▁function ▁for ▁the ▁domestic ▁firm ▁is ▁ ▁where ▁ ▁is ▁total ▁re venue , ▁ ▁is ▁total ▁cost ▁of ▁producing ▁x ▁units , ▁and ▁s ▁is ▁per ▁unit ▁subs id y ▁provided ▁by ▁the ▁government . ▁The ▁profit ▁function ▁for ▁the ▁foreign ▁firm ▁is ▁similar ▁except ▁that ▁it ▁does ▁not ▁include ▁a ▁subs id y , ▁. ▁ ▁Each ▁firm ▁cho oses ▁the ▁quantity ▁to ▁supply ▁in ▁order ▁to ▁maxim ize