Two companies, Green, Inc., and Red, Inc., produce granfalloons. Each can produce 0, 1, 2, 3, or

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Two companies, Green, Inc., and Red, Inc., produce granfalloons. Each can produce 0, 1, 2, 3, or 4 granfalloons (they can't produce fractions of granfalloons). Let Xbe the number of units produced by Green, Inc., and Y be the number of units produced by Red, Inc. Given X and Y, granfalloons sell at a price equal to $(14 - X - Y). Every granfalloon costs $5 to produce. The companies choose X and Y simultaneously, each trying to maximize profits. Draw a table representing this one-shot game, showing the players' strategies and payoffs. Does either company have a dominated strategy? Can you solve this game by the iterative deletion of dominated strategies? Find the Nash equilibrium. Would the companies do better if they both reduced production (starting from the equilibrium point) by one unit? Why or why not?n
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