Question: Two companies bid on a project. The project work could be apportioned to the two companies. Company A has the following profit function P

Two companies bid on a project. The project work could be apportioned

Two companies bid on a project. The project work could be apportioned to the two companies. Company A has the following profit function P = P(A,B)XA-C and PB = P(XA, X)XBCB where A, B are the units of work put in by company A and B respectively. (a) Determine the strategic units of work that the companies contribute at Nash equilibrium, when (x, x) = K = (2x + x). (10 pts) (b) What are the Stackelberg equilibrium strategies if company A determines its strategy first? (15 pts)

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