Question: How does your analysis in the previous question change if the government imposes a lump-sum franchise tax of 40 on each firm (that is, the

How does your analysis in the previous question change if the government imposes a lump-sum franchise tax of 40 on each firm (that is, the payoffs in the matrix are all reduced by 40). Now explain how your analysis would change if the firms have an additional option of shutting down and avoiding the lump-sum tax rather than producing 10 or 20 units and paying the tax.

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Firm 2 20 10 30 35 10 30 50 Firm 1 40 20 20 60 20

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