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Business, 05.05.2020 08:51 michael4443

Two firms, A and B, are situated next to a lake, and It costs each lakeside firm $4000 per period to use filters that avoid polluting the lake. However, each firm must use the lake's water in production, so it is also costly to have a polluted lake. The cost to each firm of dealing with water from a polluted lake is $3000 times the number of polluting firms. Assuming there are only two firms (and listing all payoffs in thousands of $).

Does either firm have a dominant strategy? Explain your answer carefully.

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