1. Two (advertisingfree) newspapers compete in prices for an innite number of days. The monopoly prots (per day) in the newspaper market are WM and the discount factor (per day) is 6. If the newspapers compete in prices, they both earn zero prots in the static Nash equilibrium. Finally, if the rms set the same price, they split the market equally and earn the same prots. On Sundays, the newspapers may sell a weekly magazine (that can be bought without buying the newspaper). The monopoly prots when selling the magazine are also WM and the competitive prots zero. (a) Suppose that the newspapers do not sell a weekly magazine. They like to collude on the monopoly price. Write down the strategies that the newspapers could follow to achieve this outcome. Find the discount rates for which they are able to sustain the monopoly price using these strategies. (b) From now on suppose that the newspapers sell a weekly magazine. For which discount rates can the monopoly price be sustained in the market for magazines? (Write down the equation that characterizes the solution.) Compare the solution found in question 1 and 2 and comment briey. (c) For which discount rates can the monopoly price be sustained both in the market for newspapers and in the market for magazines? (Write down the equation that characterizes the solution.)