(b) Now consider the case of sequential choice. Assume that firm 2 observes Xp before making its production decision x2, making this a dynamic game between firm 1 and firm 2. i. [1 mark.] What solution concept should we use here? ii. [3 marks.] Write down the maximisation programmes for firm 1 and firm 2 for their Berlin operations in this set-up, i.e. for XB and x, re- spectively. Define clearly the profit function of each firm.3. Dynamic Games of Industrial Organisation [50 marks.] Two multinational companies produce the same good. In the first period, firm 1 sells its prod- uct as a monopolist in Paris. In the second period, firm 1 competes with firm 2 in Berlin as a Cournot duopolist. There is no discounting between the two pe- riods. Firm 1 produces quantity Xp