7) 2 Firms, AT&T and Verizon, consider to simultaneously invest $10 billion in a new communication technology for cell phones.

If neither firm invests the game ends.

If only one firm invests, it must choose its price:

if it charges a high price, it gets 60 million customers, and each customer pays $400.

if it charges a low price, it gets 80 million customers, and each customer pays $200.

If both firms invest, the return is as follows:

if both firms charge a high price, each firms gets 30 million customers, and each customer pays $400.

if both firms charge a low price, each firm gets 40 million customers, and each customer pays $200.

if one firm chargers a higher and the other firm a low price, the high pricing firm gets 0 customers, and the low pricing firm gets 80 million customers. Each customer pays $200.

Note: both firms first simultaneously make their investment decisions. Afterwards, they simultaneously decide on prices!

a) Illustrate the payoff (or profit) matrix for the entire game.

b) What is the Nash equilibrium (or what are the Nash equilibria)