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6. Nimbus, Inc., and Cleansweep, Inc., are the only producers of flying brooms. Each firm has two strategies: Spend 30,000 galleons a year on research

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6. Nimbus, Inc., and Cleansweep, Inc., are the only producers of flying brooms. Each firm has two strategies: Spend 30,000 galleons a year on research and development (R&D) or spend nothing on R&D. If neither firm spends on R&D, Nimbus' economic profit is 80,000 galleons and Cleansweep's economic profit is 40,000 galleons. If each firm conducts R&D, market shares are maintained, but each firm's profit is lower by the amount spent on R&D. If Nimbus conducts R&D and Cleansweep does not, Nimbus makes an economic profit of 120,000 galleons, while Cleansweep incurs an economic loss of 20,000 galleons. If Cleansweep conducts R&D and Nimbus does not, Cleansweep makes a profit of 60,000 galleons while Nimbus loses 10,000 galleons. (a) Complete the payoff matrix below. R&D Cleansweep: Cleansweep No R&D Cleansweep: R&D Nimbus Nimbus: Cleansweep: Nimbus: Cleansweep: No R&D Nimbus: Nimbus: (b) Is there dominant strategy for Cleansweep? (c) Is there dominant strategy for Nimbus? (d) Find all the possible equilibria of this problem. (e) What are the profits of Cleansweep and Nimbus

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