5) Suppose that two firms are situated next to a lake. It costs each firm $1,500 per

period to use filters that avoid polluting the lake. However, each firm must use the

lake's water in production, so it is also costly to have a polluted lake. The cost to

each firm of dealing with water polluted lake is $1000 times the number of polluting firms. The possible outcomes for one period are illustrated by the payoff matrix below. The first number of each pair of payoffs is Lago's payoff and the second is Nessie's payoff. Assume that the firms are able to collude or cooperate of dealing with each other.