if bargaining breaks down, each manager gets revenue equal to that of his own plant. (i) As a function of p and as, what are the total revenue and dis agreement payoffs for each manager? (ii) What then will be the Nash bargaining payoffs as flmctions of p and m? [Esmemben if the total.I revenue is S and the disagreement payoffs are dp and dc for the power plant and coal mine respectively, then the Nash bargaining payoffs will be dp + 3 dp rig) and do + 3 dp dds) (iii) Using your answer to (ii), compute the levels of p that will be chosen by the power plant manager and the level of m that will be chosen by the ooal mine operator. (iv) Compute the total surplus under this ownership structure. (c) Now consider Integmtton under Power Plant Ownership: in this case, if bargaining breaks down, the power plant manager is entitled to the en tire revenue of the two operations, and the coal mine manager would get I]. Answer the same four questions as in (b) (d) Finally, consider the case of Integration under Coot Mine Grimecshtp; now the coal mine gets the entire revenue if bargaining breaks down. Answer [i) {iv} as above. {e} Suppose the managers choose the ownership structure that maximizes the total surplus. In terms of the expression you derived for total surplus in parts [b}(d), write down an inequality that must be true if (i) Nonintegration is preferred by the managers to Integration under Coal Mine Ownership (ii) Integration with Power Plant Ownership is preferred to Non integration. What then do you conclude will be the ownership structure if both in equalities hold simultaneoIley? (f) Consider the expression 011:} + Cgm for the mines revenue. Which coefcient, Cl or Cg, do you think is more reective of demand conditions in the coal market? Explain