Question: Hey! Need help big time! Everything is attached, nothing is missing. Thanks! Answer the following questions regarding the matrix below, which represents the strategic interaction
Hey! Need help big time! Everything is attached, nothing is missing. Thanks!



Answer the following questions regarding the matrix below, which represents the strategic interaction between a rm whose operation has some negative impacts on the environemnt and a government agency in charge of regulating them and ensuring environmental protection. The government can develop a mandate using one oftwo technologies, or can adopt the industry's best practices as the standard in the mandate. The firm can either continue on with business as usual or develop one of those two technologies as well. Ifthey are not in compliance with the government regulation, there is a cost of becoming so. If they are in compliance and the government adopts their practices, it provides the rm with a competitive advantage in the market. The Government Industry Best Tech. A Tech. B Practices Tech. A 10 , 4 7,5 13 , 10 The Firm Tech. B 6, 2 8, 7 10 , 10 Business as 5 , 2 4,5 15 , 0 Usual (BAU)Answer the following two questions. Do the work with paper and pencil and submit it through the upload link provided once the exam has been completed. a. Are there any pure strategy Nash Equilibrium in the above game? Show your work and explain. b. Suppose the Firm moves rst and communicates their action, turning this interaction into a sequential move game. First set up the game tree. Second, nd the equilibrium path of the subgame perfect Nash equilibrium outcome and conclude with why the Firm might want this to happen? Explain intuitively why or why not
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