Question: 2) Two electronics firms are making product development decisions. Each firm is choosing between the development of two alternative computer chips. One system has higher

2) Two electronics firms are making product development decisions. Each firm is choosing between the development of two alternative computer chips. One system has higher efficiency, but will require a larger investment and will be more costly to produce. Based on estimates of development costs, production costs, and demand, the following present value calculations represent the value of the alternatives (high efficiency chips or low efficiency chips) to the firms. Firma High Low 1,2 4,5 High Firm 1. Low 2,7 5,3 a) Are there any dominant or dominated strategies in this game? b) Show the equilibrium (or equilibria) of the game. C) Suppose that firm 1 can commit to a product before firm 2. Draw the corresponding extensive form (game tree) and find the subgame perfect equilibrium

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